Microsoft: Budgeting Data Centers How Exactly?
January 20, 2026
Another dinobaby post. No AI unless it is an image. This dinobaby is not Grandma Moses, just Grandpa Arnold.
Here’s how bean counters and MBA work. One gathers assumptions. Depending on the amount of time one has, the data collection can be done blue chip consulting style; that is, over weeks or months of billable hours. Alternatively, bean counters and MBA can sit in a conference room, talk, jot stuff on a white board, and let one person pull the assumptions into an Excel-type of spreadsheet. Then fill in the assumptions, some numbers based on hard data (unlikely in many organizations) and some guess-timates and check the “flow” of the numbers. Once the numbers have the right optics, reconvene in the conference room, talk, write on the white board, and the same lucky person gets to make the fixes. Once the flow is close enough for horse shoes, others can eyeball the numbers. Maybe a third party will be asked to “validate” the analysis? And maybe not?
Softies are working overtime on the AI data center budget. Thanks, Venice.ai. Good enough. Apologies to Copilot. Your output is less useful than Venice’s. Bummer.
We now know that Microsoft’s budgeting for its big beautiful build out of data centers will need to be reworked. Not to worry. If the numbers are off, the company can raise the price of an existing service or just fire however many people needed to free up some headroom. Isn’t this how Boeing-type companies design and build aircraft? (Snide comments about cutting corners to save money are not permitted. Thank you.)
How do “we” know this? I read in GeekWire (an estimable source I believe) this story: “Microsoft Responds to AI Data Center Revolt, Vowing to Cover Full Power Costs and Reject Local Tax Breaks.” I noted this passage about Microsoft’s costs for AI infrastructure:
The new plan, announced Tuesday morning [January 13, 2026) in Washington, D.C, includes pledges to pay the company’s full power costs, reject local property tax breaks, replenish more water than it uses, train local workers, and invest in AI education and community programs.
Yep, pledges. Just ask any religious institution about the pledge conversion ratio. Pledges are not cold, hard cash. Why are the Softies doing executive level PR about its plans to build environmentally friendly and family friendly data centers? People in fly over areas are not thrilled with increased costs for power and water, noise pollution from clever repurposed jet engines and possible radiation emission from those refurbed nuclear power plants in unused warships, and the general idea of watching good old empty land covered with football stadium sized tan structures.
Now back to the budget estimates for Microsoft’s data center investments. Did those bean counters include set asides for the “full power costs,” property taxes, water management, and black hole costs for “invest in AI education and community.”
Nope.
That means “pledges” are likely to be left fuzzy, defined on the fly, or just forgotten like Bob, the clever interface with precursor smart software. Sorry, Copilot Bob’s help and Clippy missed the mark. You may too for one reason: Apple and Google have teamed up in an even bigger way than before.
That brings me back to the bean counters at Microsoft, a uni shuttle bus full of MBAs, and a couple of railroad passenger cars filled with legal eagles. The money assumptions need a rethink.
Brad Smith, the Microsoft member of “leadership” blaming security breaches on 1,000 Russian hackers, wants this PR to work. The write up reports that Mr. Smith, the member of Microsoft leadership said:
Smith promised new levels of transparency… The companies that succeed with data centers in the long run will be the companies that have a strong and healthy relationship with local communities. Microsoft’s plan starts by addressing the electricity issue, pledging to work with utilities and regulators to ensure its electricity costs aren’t passed on to residential customers. Smith cited a new “Very Large Customers” rate structure in Wisconsin as a model, where data centers pay the full cost of the power they use, including grid upgrades required to support them.
And that’s not all. The pledge includes this ethically charged corporate commitment. I quote:
- “A 40% improvement in water efficiency by 2030, plus a pledge to replenish more water than it uses in each district where it operates. (Microsoft cited a recent $25 million investment in water and sewer upgrades in Leesburg, Va., as an example.)
- A new partnership with North America’s Building Trades Unions for apprenticeship programs, and expansion of its Datacenter Academy for operations training.
- Full payment of local property taxes, with no requests for municipal tax breaks.
- AI training through schools, libraries, and chambers of commerce, plus new Community Advisory Boards at major data center sites.”
I hear the background music. I think it is the double fugue or Kyrie in Mozart’s Requiem, but I may be wrong. Yes, I am. That is the sound track for the group reworking the numbers for Microsoft’s “beat Google” data center spend.
You can listen to Mozart’s Requiem on YouTube. My hunch is that the pledge is likely to be part of the Microsoft legacy. As a dinobaby, I would suggest that Microsoft’s legacy is blaming users for Microsoft’s security issues and relying on PR when it miscalculates [a] how people react to the excellent company’s moves and [b] its budget estimates for Copilot, the aircraft, the staff, the infrastructure, and the odds and ends.
Net net: Microsoft’s PR better be better than its AI budgeting.
Stephen E Arnold, January 20, 2026
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