• Satya Nadella defended Microsoft's AI data center plans amid community backlash at Build keynote.
• Microsoft's AI infrastructure aims to address environmental and economic community concerns.
• Microsoft is spending heavily on data center expansion.

Microsoft CEO Satya Nadella used a conference keynote on Tuesday to defend against one of the biggest challenges to the company's massive AI datacenter buildout: Community backlash.

AI data centers have become such a political flashpoint that more people in a recent Gallup poll said they'd rather live near a nuclear reactor. The data center boom has received criticism over growing power costs, environmental concerns, and the potential impact of AI on jobs.

Microsoft in January released a plan to build what the company called "community-first" AI infrastructure, making promises including that its data centers won't raise electricity rates for residents.

"How do we ensure that the DCs do not increase electricity prices, making sure that we are replenishing all our water use, creating jobs in the local communities for the local residents, adding to the tax base, making sure we're strengthening the communities by investing in local training and the nonprofits in the area?" Nadella said at Microsoft's Build conference.

"Only when we live up to these principles, do the hard work around it, is when we earn the permission to go ahead and innovate and build," he added.

During Tuesday's keynote, Nadella said the company's Azure cloud business spans more than 500 data centers in 80 regions, which he described as the "most expansive hyperscaler footprint out there." Microsoft has added more data center capacity in the last 18 months than in the first decade of Azure, the CEO also noted.

Building these facilities, and packing them with AI chips, networking equipment and other gear, is hugely expensive. The biggest cloud providers are on course to spend hundreds of billions of dollars this year on data centers. Meeting Microsoft's recent pledges could add to this cost.

During his talk on Tuesday, Nadella said Microsoft is using a cooling loop for its data centers that is filled once, which helps the facilities operate with almost zero water consumption.

"In fact, the daily water usage over the course of an entire year is roughly equivalent to what a single restaurant would use," Nadella said.

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