How Deep is the Data Center Rabbit Hole?

The New Digital Empire: An Investigation into the Proliferation, Ownership, and National Security Implications of U.S. Data Centers

The United States is in the midst of an unprecedented data center construction boom, a modern-day gold rush driven by the exponential growth of artificial intelligence, cloud computing, and digital services. These facilities, the physical backbone of the digital world, are proliferating at a staggering rate, consuming vast amounts of land, power, and water. While this boom fuels economic growth, it also raises critical questions about who is building, funding, and ultimately controlling this essential infrastructure. This investigation provides a research-based analysis of the rate of data center construction across the United States, the key entities behind their development, and the significant foreign ownership and controlling interests involved. Furthermore, it examines the profound national security implications of this trend and the adequacy of the current regulatory framework designed to protect America’s digital sovereignty.

The Great Acceleration: Data Center Construction and Proliferation

The rate of data center construction in the United States has reached a fever pitch, transforming the sector from a niche real estate asset into a dominant force in the national construction landscape. The scale of this growth is unprecedented, with spending and development pipelines reaching record highs.

According to a comprehensive investigation by Business Insider, which involved analyzing air permits across all 50 states, there were 1,240 data centers already built or approved for construction in the U.S. by the end of 2024. This construction surge is reflected in national spending data. In July 2025 alone, data center construction starts accounted for $14.0 billion, with monthly spending having peaked at a staggering $40 billion in June 2025, a 30% increase from the previous year. Overall, data center construction spending surged by 50% in 2024, and these facilities now represent 32% of total construction spending, a dramatic increase from just 5% in 2014.

The market is projected to continue its explosive growth. The U.S. data center construction market is expected to grow from $69 billion in 2024 to $128 billion by 2034. This expansion is not just in the number of facilities but also in their scale. The average data center size is increasing, with projections showing a rise from 40 MW today to 60 MW by 2028, and approximately one-third of new campuses are expected to exceed 200 MW in capacity. This growth is fueled by insatiable demand, with a record-low vacancy rate of 1.9% in primary data center markets in the first half of 2025.

The Architects of the Digital Age: Who is Building America’s Digital Infrastructure?

The data center construction and development landscape is dominated by a concentrated group of large, specialized firms. These companies, ranging from massive general contractors to dedicated data center developers and operators, are the primary architects of America’s rapidly expanding digital infrastructure. Understanding who these entities are is crucial to understanding the control and ownership dynamics of this critical sector.

The construction of these highly specialized facilities is a multi-billion dollar industry. According to Building Design+Construction’s 2025 Giants 400 Report, the top five data center construction firms alone accounted for over $24 billion in revenue in 2024. This concentration of construction power in the hands of a few key players is a defining characteristic of the market.

Beyond the construction firms, the data center ecosystem is comprised of operators and developers who own and manage the facilities. These can be broadly categorized into two groups: colocation/wholesale providers and hyperscale cloud providers.

Colocation and Wholesale Providers: These companies build and operate data centers, leasing space and power to other businesses. Key players in this segment include global giants like Equinix and Digital Realty, as well as other major operators such as CyrusOne, CoreSite, and QTS Realty Trust.

Hyperscale Cloud Providers: The largest technology companies including, Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform, Meta (Facebook), and Apple, are also major players in the data center space. These companies often design and build their own massive data center campuses to support their global cloud and consumer services.

The immense capital required for data center development has also attracted significant investment from private equity and other financial institutions. Firms like DigitalBridge, Blackstone, and KKR have become major investors, treating data centers as a critical infrastructure asset class with the potential for stable, long-term returns. The influx of a private capital has further accelerated the pace of construction and consolidation within the industry.

The Global Landlord: Foreign Ownership and Controlling Interests in U.S. Data Centers

A significant and growing portion of the capital flowing into the U.S. data center market originates from foreign entities, including sovereign wealth funds and multinational corporations. This trend is transforming the ownership landscape of America’s digital infrastructure, raising important questions about national sovereignty and security.

Foreign investment in U.S. data centers is no longer a speculative venture but a strategic imperative for many global funds. As one industry report notes,

“Sovereign wealth funds, global private equity firms, and infrastructure investors from Europe, the Middle East, and Asia are pouring billions into U.S. data center assets.”

These investors are attracted by the stability of cash flows from long-term leases with hyperscale tenants and the unique combination of real estate and technology growth potential.

Major Foreign Investment Entities

The most significant foreign investment in U.S. data centers comes from sovereign wealth funds in the Middle East and Asia.

Middle Eastern Sovereign Wealth Funds:

• Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company (UAE)

• Public Investment Fund (PIF) (Saudi Arabia)

Asian Sovereign Wealth Funds:

• GIC (Government of Singapore Investment Corporation)

• Temasek Holdings (Singapore)

One of the most striking examples of this trend is the $20 billion investment in U.S. data centers announced by DAMAC Properties, a UAE-based company controlled by Emirati billionaire Hussain Sajwani, in January 2025. This single investment, with a projected future capacity of 2,000 MW, underscores the scale of foreign capital entering the U.S. data center market.

The Case of China

While investment from Middle Eastern and Asian allies has been welcomed, investment from China has faced intense scrutiny. Chinese foreign direct investment (FDI) in the U.S. has plummeted from a high of $46 billion in 2016 to under $4 billion in 2024, largely due to heightened regulatory oversight. The Committee on Foreign Investment in the United States (CFIUS) has intensely scrutinized Chinese investments in the technology sector, leading to multiple abandoned deals and very few approvals. This reflects a broader U.S. policy to limit China’s access to American data and control over its digital infrastructure.

The Sovereignty Question: National Security Implications and Regulatory Oversight

The proliferation of foreign-owned data centers on U.S. soil presents a complex and evolving national security challenge. As these facilities become increasingly integral to the functioning of the U.S. economy and government, the question of who controls them becomes a matter of strategic importance.

Federal authorities are now treating data centers as strategic infrastructure. Executive Order 14117, issued in February 2024, explicitly highlighted the risk of adversarial nations gaining access to U.S. data through foreign-controlled infrastructure. The primary tool for overseeing foreign investment is the Committee on Foreign Investment in the United States (CFIUS), an interagency body authorized to review and block transactions that pose a national security risk.

However, the current regulatory framework has significant limitations. As a Carnegie Endowment for International Peace report notes, while CFIUS can block a foreign acquisition of a U.S. company, it has “no authority to... [regulate] U.S. data flows to China and the operation of Chinese software and connected technologies in the United States” after an acquisition is approved. This creates a critical vulnerability: a foreign entity could acquire a U.S. data center company, pass CFIUS review, and then potentially be compelled by its home government to provide access to the data stored within that facility.

“China’s access to data and control of software and connected technology in the United States provides Beijing with potential tools to conduct espionage; influence politics; and, in extreme cases, attack critical infrastructure, commercial, and government networks inside the United States.” - Carnegie Endowment for International Peace

This regulatory gap is exacerbated by the use of complex ownership structures, including shell companies, which can obscure the true beneficial owners of a data center asset. While recent regulations have sought to enhance CFIUS enforcement powers and restrict certain data-related transactions with entities tied to countries of concern, the framework remains a patchwork of overlapping authorities and jurisdictions.

Furthermore, some states have begun to take matters into their own hands, passing laws that restrict foreign ownership of land and critical infrastructure. This creates a complex and potentially conflicting web of state and federal regulations that data center developers and investors must navigate.

Conclusion

The U.S. data center boom is a double-edged sword. On one hand, it is a powerful engine of economic growth and technological innovation. On the other, the rapid proliferation of these facilities, coupled with significant foreign investment, has created a new and complex national security landscape. The research reveals a clear trend: while the U.S. government is actively working to limit the influence of adversaries like China in its digital infrastructure, it has simultaneously opened the door to massive investments from other foreign entities, including sovereign wealth funds from the Middle East and Asia.

This creates a potential vulnerability where a significant portion of America’s critical digital infrastructure is owned and controlled by foreign entities. The current regulatory framework, while strengthening, still has significant gaps in its ability to monitor and regulate the post-acquisition operations of these facilities. The use of complex ownership structures and the sheer scale of foreign investment make it challenging to fully assess the risks.

As the United States continues to build its digital empire, it must grapple with the fundamental question of who holds the keys. Without a more comprehensive and robust regulatory framework that addresses the realities of global capital flows and the strategic importance of data centers, the U.S. risks ceding a dangerous level of control over its own digital destiny.