The artificial intelligence industry is confronting a rapidly escalating public backlash, with its negative societal and economic impacts, or "externalities," growing faster than companies can effectively address them, despite calls for international governance.
OpenAI CEO Sam Altman recently reiterated his proposal for a new international body to oversee AI safety, suggesting it would prevent power concentration and democratize AI's benefits. However, three and a half years after ChatGPT's launch, initial wonder has largely transformed into widespread anger and anxiety, with The Economist warning that "The AI backlash is only getting started."
Public opposition to data centers, critical infrastructure for AI, is particularly intense. A May Gallup survey revealed 71% of Americans are opposed to a data center being built in their area. This sentiment has significantly hampered construction plans, with Data Center Watch reporting that opposition delayed or blocked at least 75 US data center projects worth $130 billion in the first quarter of 2026, driven by concerns over electricity bill hikes, reduced government funding from tax breaks, greenhouse gas emissions, and infrasonic vibrations.
Economic anxieties also fuel the growing discontent, particularly the fear that AI will eliminate or drastically alter jobs. While the current job market remains robust, a team led by Stanford economist Erik Brynjolfsson found that employment for workers aged 22 to 25 in jobs highly exposed to AI is shrinking by 3.8% annually. This contributes to nearly two-thirds of Americans believing AI will lead to fewer jobs over the next two decades.
Furthermore, the immense demand for AI infrastructure is causing "AI-powered inflation." The buildout is consuming the majority of computer memory and storage chips, leading to price increases across tech products. Apple has raised MacBook and iPad prices by up to 25%, Microsoft increased Xbox console prices by $100 to $150, and Valve debuted its cheapest Steam Machine at $1,049. Analysts anticipate this memory supply crunch and associated price hikes will persist through 2027, impacting consumers facing stagnant wages.
In a related development, the US Commerce Department lifted its restrictions on Anthropic's Claude Fable 5 and Mythos 5 models after the company committed to "proactively detect and address security risks." The ban, initially imposed following Amazon's report of a potential jailbreak, had created a state of "regulatory chaos" for AI companies, according to former Facebook chief security officer Alex Stamos, who noted Anthropic's apparent frustration with the administration's handling of the situation.
Despite industry efforts, including workforce retraining programs and covering infrastructure costs, the negative impacts of AI are expanding at an unsustainable pace. While Altman envisions AI delivering "abundance on a scale the world has never known before," for many, AI is currently delivering widespread annoyance. The industry must significantly increase its efforts to address these costs, or the future backlash could be far more severe.