Goldman Institute Advocates for 'Data Center Diplomacy' Amid U.S. AI Competition

Data centers are crucial to artificial intelligence infrastructure, and their global locations could have significant geopolitical impacts for the U.S., according to Jared Cohen, president of global affairs at Goldman Sachs. Cohen, the former CEO of Google’s Jigsaw and now co-head of the Goldman Sachs Global Institute, likened AI's momentum to the next Industrial Revolution in a Foreign Policy op-ed, highlighting the concept of "data center diplomacy."

"This technology is on par with the creation of the internet but has emerged much more abruptly," Cohen told CNBC. "Data may be the new oil, and ultimately, nations—not nature—will determine the future of AI infrastructure."

AI relies heavily on massive data centers for training. Companies like Google, Amazon, Microsoft, and Meta are investing around $600 billion in these efforts over the next three years, according to Goldman. A key geopolitical factor is China, which, despite a slowing economy, is investing in AI data centers through a $6.1 billion national initiative, "Eastern Data, Western Computing." The U.S. has its own initiatives, including a task force on AI infrastructure.

Countries with substantial capital face a "binary" choice for AI investment: the U.S. or China. While the U.S. leads in AI, Cohen says data center construction could become a bottleneck, necessitating overflow options. The U.S. has partnered with nations like Canada, Australia, and France but also needs to consider "geopolitical swing states," which Cohen identifies as nations with significant capital and a tendency to align with China. He highlights the Middle East as a key partner.

Oil-rich Gulf nations, driven by a need to diversify their economies, have become major backers of AI ventures, managing approximately $11.3 trillion through sovereign funds. Countries like the UAE, Qatar, and Saudi Arabia are well-positioned to quickly build data center capacity. "The Arab Gulf countries present many promising opportunities for AI data centers," Cohen wrote, noting that young, ambitious leaders in the region aim to be leaders in the AI revolution. As one UAE official stated, "We missed the first industrial revolution, but we are not missing the AI revolution."