The great AI upheaval

Governments may soon have to deal with the consequences

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Welcome to Balance of Power, bringing you the latest in global politics. If you haven't yet, sign up here. The AI juggernaut just keeps on rolling. Governments worldwide will soon have to deal with the consequences. Two deals announced yesterday illustrate the onward march of data centers that house the massive computing power needed for artificial intelligence. An Australian AI startup, Firmus Technologies, secured a $10 billion loan from Blackstone among others to construct centers equipped with Nvidia chips, helping to cement the nation as a chief beneficiary of the global phenomenon. Vietnam is another winner, with G42 of the United Arab Emirates leading a $1 billion project to build data centers and cloud-computing services in the Southeast Asian country. Investment in AI-related infrastructure is projected by Moody's Ratings to surpass $3 trillion over the next five years, largely funded by debt and irrespective of power and water concerns. The combined AI-driven capital expenditure of Alphabet, Amazon.com, Meta and Microsoft may reach $650 billion this year alone. All that without a viable answer to the question: What is it for? Cabinets housing servers inside a data hall at a NextDC data center in Sydney. Photographer: Brent Lewin/Bloomberg Amid the fervor over potential productivity gains, there are some ominous portents of what lies ahead. Anthropic's new tools with applications in legal services and financial research sent spasms through markets last week as investors suddenly woke up to the possibility that entire businesses may be doomed. Yesterday it was the turn of insurance stocks on the back of another AI development. None of this is necessarily a bad thing. But it shows how investors, just like governments and the voting public, can only guess at the scale of the disruption to come, to whole industries, jobs and lives. Governments already battling the harmful impact of social media — with Brazil the latest to plan online controls for minors — appear at best too preoccupied with firefighting, and at worst oblivious to the coming impact. Politicians may find they don't have the luxury of waiting to see what AI brings. — Alan Crawford US President Donald Trump displays an executive order on his AI action plan during a summit in July 2025 in Washington. Photographer: Chip Somodevilla/Getty Images Global Must Reads Keir Starmer shored up his position as UK prime minister, securing public support from every cabinet minister before a passionate speech to lawmakers. His role was under threat due to his appointment of Peter Mandelson as US ambassador despite the Labour grandee's known links to convicted pedophile Jeffrey Epstein. The UK meanwhile is experiencing an economic revival, yet Starmer's ratings are at rock bottom, suggesting the recovery isn't resonating with the electorate. WATCH: Bloomberg Opinion columnist Rosa Prince comments on the situation facing Starmer. The US said American-flagged ships should stay as far as possible from Iranian waters when navigating the Strait of Hormuz after a vessel was harassed last week. Iran extended the prison sentence of a Nobel peace laureate and detained several prominent reformers, escalating a recent crackdown on dissent. Authorities in Australia's most populous state meantime charged nine protesters following demonstrations over Israeli President Isaac Herzog's visit. The European Union is preparing a series of options to embed Ukraine's membership in a future peace deal, including providing Kyiv up front with the protection that comes with accession as well as immediate access to some EU rights, sources say. At the same time, the bloc would give Ukraine a clear timeframe of steps that it needs to take to advance with the formal procedure, they said. President Emmanuel Macron has a golden chance to insulate one of France's most important institutions from the far right. With Marine Le Pen's National Rally strongly positioned for next year's election, the early resignation of the Bank of France chief François Villeroy de Galhau offers the current head of state — rather than whoever wins the vote — the opportunity to name a successor. Prime Minister Sanae Takaichi's election victory gives Chinese leader Xi Jinping a dilemma: engage with Japan's most popular post-war leader or continue a deep freeze with the top US ally in Asia. Since November, when she implied in parliament that a Chinese invasion of Taiwan could prompt Japan to deploy its military, Beijing has imposed export controls and tourism curbs to pressure her to retract those remarks. An election poster for Takaichi in Tokyo on Sunday. Photographer: Tomohiro Ohsumi/Getty Images China signaled greater efforts ahead to protect national security in Hong Kong after the sentencing of Jimmy Lai renewed foreign governments' calls for the former media mogul's release. Venezuelan authorities re-arrested Juan Pablo Guanipa, a prominent dissident and ally of opposition leader María Corina Machado, just hours after releasing him from prison, showing the limits to the regime's reconciliation gestures. China's top electric-vehicle producer BYD has joined hundreds of companies in a US lawsuit pushing to be refunded for duties paid under the Trump administration's import tariffs. US Vice President JD Vance signed a civil nuclear-cooperation agreement with Armenia, pledging as much as $9 billion in potential investment as the South Caucasus country seeks to reduce its long-standing reliance on Russia for energy. Sign up for the Washington Edition newsletter for news from the US capital and watch Balance of Power at 1 and 5 p.m. ET weekdays on Bloomberg Television. Chart of the Day The relentless surge in memory-chip prices over the past few months has driven a vast divide between winners and losers in the stock market, and investors don't see any end in sight. Money managers and analysts are now assessing which firms can best navigate the squeeze by locking in supplies, raising product prices or redesigning to use less memory. And Finally Aberdeen has for decades carried the title of Europe's oil capital after vast offshore reserves discovered in the North Sea in the 1970s transformed the Scottish city from a modest fishing port into a booming economy. Yet that status has been slipping for years, sharpening a political fight in Westminster over whether the industry is even worth salvaging as the green transition accelerates. To many opposition leaders, the prescription is straightforward: lift exploration bans and roll back taxes they argue have damaged the sector. But the reality looks different on the ground. The courtyard of a housing block near Aberdeen's city center. Photographer: Margaret Mitchell/Bloomberg More from Bloomberg Check out our Bloomberg Investigates film series about untold stories and unraveled mysteries Next China for dispatches from Beijing on where China stands now — and where it's going next Next Africa, a twice-weekly newsletter on where the continent stands now — and where it's headed Economics Daily for what the changing landscape means for policymakers, investors and you Green Daily for the latest in climate news, zero-emission tech and green finance Explore more newsletters at Bloomberg.com We're improving your newsletter experience and we'd love your feedback. If something looks off, help us by reporting it here. 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