Eric Schmidt’s Quiet Data Center Empire Is Negotiating a Massive Texas Deal With Google

Eric Schmidt, the former chief executive of Google, has spent the past several years building a sprawling business empire that stretches far beyond the search engine company he once led. Now, one of his most ambitious ventures — a data center development firm — is in advanced negotiations with his former employer for a deal in Texas that could be worth billions of dollars, according to people familiar with the matter.

The arrangement underscores how the explosive demand for artificial intelligence infrastructure has created extraordinary opportunities for well-connected players who can move quickly to secure land, power, and construction capacity. It also raises fresh questions about the tangled web of relationships between Big Tech and the entrepreneurs who orbit its gravitational pull.

Schmidt’s Data Center Firm Eyes a Landmark Agreement With Google

According to a report by Business Insider, Schmidt’s data center company is negotiating a significant deal with Google that would involve facilities in Texas. The former Google CEO, who served in the top role from 2001 to 2011 and remained executive chairman until 2015, has been quietly assembling a portfolio of data center assets through various investment vehicles. The Texas negotiations represent what could be one of the most consequential transactions in the rapidly expanding data center sector, a market that has seen valuations and deal sizes balloon as hyperscalers race to build out the computing infrastructure required to train and deploy large AI models.

The specifics of the deal remain closely guarded, but people briefed on the discussions indicated that the arrangement could involve Google leasing substantial capacity from Schmidt’s firm, a structure that has become increasingly common as cloud and AI companies seek to scale their infrastructure without bearing the full burden of development risk and upfront capital expenditure. Texas has emerged as one of the most sought-after states for data center development, owing to its relatively deregulated energy market, abundant land, and business-friendly regulatory environment.

The AI Gold Rush Is Reshaping the Data Center Industry

The deal comes at a time when the data center industry is experiencing what many analysts describe as an unprecedented construction boom. According to recent estimates from JLL, the North American data center market saw record absorption in 2024, and the pipeline of projects under development has swelled to historic levels. Major technology companies including Google, Microsoft, Amazon, and Meta have collectively pledged hundreds of billions of dollars in capital expenditure for AI-related infrastructure over the coming years.

Google parent Alphabet announced in early 2025 that it planned to spend approximately $75 billion on capital expenditures during the year, a figure that dwarfed previous spending levels and signaled the company’s determination to remain competitive in the AI arms race. Much of that spending is directed toward data centers and the specialized chips that power them. The sheer scale of these commitments has created a bottleneck in the supply chain, from electrical transformers and cooling systems to construction labor and, critically, power generation capacity.

Texas: The New Epicenter of Hyperscale Computing

Texas has become ground zero for this building frenzy. The state’s ERCOT grid, while occasionally strained during extreme weather events, offers some of the lowest electricity prices in the nation and a permitting process that is generally faster than in states like Virginia, which has long been the dominant data center market. Major metro areas including Dallas-Fort Worth, San Antonio, and Houston have all seen a surge in data center development activity, and increasingly, developers are looking at more rural locations where land is cheap and power interconnection timelines are shorter.

Schmidt’s interest in Texas is consistent with broader industry trends. Several major data center developers, including Digital Realty, QTS, and Compass Datacenters, have significantly expanded their Texas footprints in recent years. The state’s appeal is further bolstered by its proximity to emerging renewable energy resources, particularly wind and solar, which can help technology companies meet their sustainability commitments while powering energy-hungry AI workloads.

The Complicated Optics of a Former CEO Doing Business With His Old Company

Schmidt’s negotiations with Google inevitably invite scrutiny. While he departed his executive roles at Alphabet years ago, his deep familiarity with the company’s operations, strategic priorities, and key decision-makers gives him an advantage that few competitors can match. Critics have long noted that the revolving door between Big Tech leadership and the broader technology investment ecosystem can create conflicts of interest, even when no formal rules are broken.

Schmidt has not been shy about leveraging his expertise and relationships. Since leaving Alphabet’s board in 2019, he has invested aggressively in artificial intelligence, defense technology, and related infrastructure. His ventures include investments in AI startups, a prominent role in advising the U.S. government on technology policy, and now a growing presence in the physical infrastructure that underpins the AI revolution. A deal with Google would represent a natural convergence of these interests, but it would also highlight the degree to which the technology industry’s most powerful figures can benefit from multiple sides of the same transaction.

Schmidt’s Expanding Portfolio of AI-Adjacent Investments

Schmidt’s data center ambitions are part of a broader strategy that has seen the billionaire position himself at the intersection of AI, energy, and national security. He has been an outspoken advocate for accelerating AI development in the United States, frequently arguing that the country must move faster to maintain its technological edge over China. His investment firm, Innovation Endeavors, has backed numerous AI and deep-tech startups, and he has personally funded research initiatives at universities and think tanks focused on AI policy.

In the data center realm specifically, Schmidt appears to be following a playbook that has proven highly lucrative for other investors. Private equity firms and infrastructure funds have poured capital into data center platforms in recent years, attracted by the long-term, contract-backed revenue streams that hyperscale leases provide. Blackstone, KKR, and Brookfield are among the major financial players that have made multibillion-dollar bets on the sector. Schmidt’s entry into this space, armed with insider knowledge of what the largest cloud providers need and when they need it, positions him as a formidable competitor.

Power Constraints and the Race to Secure Energy

One of the most critical challenges facing any data center developer in Texas — or anywhere else — is securing adequate power supply. AI training clusters consume enormous amounts of electricity, with a single large-scale AI data center campus potentially requiring hundreds of megawatts or even gigawatts of power. This has led to intense competition for grid interconnection capacity and has prompted some developers to explore alternative power sources, including natural gas peaker plants, small modular nuclear reactors, and dedicated renewable energy installations.

Google has been particularly aggressive in pursuing innovative energy solutions for its data centers. The company has signed multiple agreements for next-generation nuclear power and has invested in geothermal energy technology. Any deal between Schmidt’s firm and Google in Texas would likely need to address the power question head-on, potentially involving commitments to develop or procure dedicated energy resources for the facilities in question. As Business Insider noted, the negotiations are complex and multifaceted, reflecting the many variables that must be resolved before a deal of this magnitude can be finalized.

What This Deal Signals for the Broader Market

If completed, a major data center agreement between Schmidt’s firm and Google would send a powerful signal to the broader market. It would validate the thesis that demand for AI infrastructure is so intense that even the largest technology companies cannot build fast enough on their own and must turn to third-party developers for additional capacity. It would also demonstrate that well-capitalized, well-connected entrepreneurs can carve out significant positions in a market that has traditionally been dominated by specialized real estate investment trusts and infrastructure funds.

For Google, the deal would represent a pragmatic approach to scaling its AI capabilities. Rather than waiting for its own development pipeline to deliver new capacity, the company could accelerate its buildout by leasing facilities developed by Schmidt’s firm. This kind of build-to-suit arrangement has become increasingly common across the industry, with hyperscalers willing to sign long-term leases of 10 to 15 years or more in exchange for facilities that are customized to their specifications.

The Stakes Have Never Been Higher

The broader context for this deal is a technology industry that is betting its future on artificial intelligence. The companies that can deploy the most computing power, the fastest, stand to gain an enormous competitive advantage in everything from search and advertising to enterprise software and autonomous systems. The physical infrastructure required to support this ambition — the data centers, the power plants, the fiber optic networks — has become as strategically important as the software and algorithms that run on it.

Eric Schmidt, who helped build Google into one of the most powerful companies in the world, now appears poised to profit from the next chapter of its growth. Whether the Texas deal ultimately closes remains to be seen, but the negotiations themselves reveal a great deal about the forces reshaping the technology industry and the individuals who are best positioned to capitalize on them.

* This article was originally published here