In a governor’s race that has focused more on data center construction than artificial intelligence technology, Democratic gubernatorial candidate David Crowley on Tuesday announced a plan for state regulations on AI aimed at protecting vulnerable Wisconsinites.
In an 11-point plan shared with Wisconsin Watch, Crowley calls for guardrails on AI offerings for minors and holding technology companies responsible for scams and fraud on their platforms. Some key components of the plan include:
Limiting access to AI chatbot apps for children under 13.
Prohibiting addictive design features, such as infinite scrolling and autoplay, on accounts of minors.
Increasing penalties for circulating AI-generated sexual images of minors.
Allowing families to sue AI platforms if their content harms children, such as by promoting suicide or eating disorders.
Penalizing technology companies that profit from scams or fraudulent ads.
More funding for adult protective services and resource centers that can help victims of scams or fraud.
Crowley, the Milwaukee county executive, is running for governor against Republican U.S. Rep. Tom Tiffany in what polling from Marquette University Law School shows could be another close governor’s race in Wisconsin. AI policy debates between the two candidates in the months since the August primary have mostly been focused on the planning and construction of AI data centers, rather than the technology itself.
In a statement, Tiffany also said Wisconsin needs “commonsense guardrails” to protect children and older adults, including holding companies accountable for platforms that allow creation of sexually explicit images or engage minors in inappropriate chatbot conversations. Tiffany said he also wants to prevent personal data from “falling into the hands of foreign adversaries, including Communist China.”
“As governor, I will also support commonsense age-verification requirements for app providers, strengthen parental-consent protections, and give parents greater control over their children’s online activity,” Tiffany said.
Crowley’s proposed state-level AI regulations land as President Donald Trump has dismissed calls for guardrails and warnings from technology company leaders asking for government oversight as their platforms become more advanced.
Trump in May 2025 signed the Take it Down Act, which criminalized the online publication of real and AI-generated intimate images and requires social media platforms to remove them once notified of their existence. Tiffany, and the rest of Wisconsin’s congressional delegation, voted for the bill in 2025.
Other proposed federal legislation has not advanced, including bills requiring public reporting of safety incidents by AI companies and requiring labels on any AI-generated content. Crowley in a statement said he would not “wait around for DC to act” on additional AI regulations if he is elected.
“Like so many parents, Ericka and I are raising our three girls in the age of social media and AI, and we’re navigating things no generation before us has ever had to, worrying about whether a stranger is messaging our kids, or a fake picture of our daughter is going around school, or even scammers trying to drain a grandparent’s life savings,” Crowley said.
The proposals in Crowley’s regulatory plan would require state legislative action. They echo recent bipartisan efforts signed into law by Gov. Tony Evers, including a series of bills that classified sextortion as a crime and provided additional recourse for victims and their families.
Additionally, Attorney General Josh Kaul in August announced Wisconsin could receive up to $313 million in a settlement social media company Meta made with 47 states in a case that alleged addictive components of its platforms threatened teens’ mental health.
Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.
Wisconsin has spent decades building one of the country’s strongest apprenticeship cultures.
In 2025, the state reached record Registered Apprenticeship participation, with 18,524 apprentices across more than 3,095 employers. Youth Apprenticeship also reached record scale, enrolling 11,344 high school juniors and seniors and partnering with 7,447 employers.
Now Wisconsin needs to apply that same learn-by-doing discipline to the artificial intelligence transition.
Stanford Digital Economy Lab’s August employment update found that employment among U.S. workers ages 22-25 in highly AI-exposed occupations is about 19% below where it would be if it had kept pace with similarly aged workers in less-exposed occupations. The comparable measure was 15% at the July 2025 data vintage. The adjustment is appearing mainly through reduced hiring, especially where AI automates tasks people previously performed.
That matters because entry-level work is not just cheap labor. It is the training ground where people learn how an organization actually operates.
A junior analyst becomes valuable by seeing why a clean spreadsheet can still produce a bad decision. A new claims employee learns which apparently routine case contains the one fact that changes everything. A beginning marketer learns that a polished message can still be wrong for the audience. Those lessons come from repetitions, exceptions and coaching.
If AI performs the first-pass work and the employer simply eliminates the beginner, Wisconsin gets an efficiency gain today and a capability problem later.
The state should encourage an apprenticeship dividend for AI adoption. Employers that save meaningful labor time through AI should reinvest a defined share of those savings into structured learning for newer workers. That can mean mentor hours, supervised exception cases, verification rotations, paid internships or registered apprenticeship slots in occupations that have not traditionally used apprenticeship language.
Wisconsin already has the machinery to support this. Its 2026-2028 Youth Apprenticeship grant program is designed to sustain and expand work-based learning partnerships among schools, employers, colleges, workforce boards and other local organizations. The state is also directing workforce funding toward advanced manufacturing and AI through WisTRAIN, including training for human-AI collaboration.
What is missing is a measurement standard for the human side of the investment.
Employers should track time to independent competence alongside time saved. How long does it take a new worker to verify an AI-generated answer, catch an exception, explain the trade-offs and make a sound decision without close supervision? If that clock slows down even as the productivity dashboard improves, the organization is consuming its own future talent.
Wisconsin’s apprenticeship tradition offers a better path. Use AI to remove repetitive preparation, then move beginners more quickly into the work that requires judgment. Give experienced workers explicit coaching responsibilities. Make the workplace an extension of the classroom, just as the Youth Apprenticeship program already does.
AI productivity should not mean a thinner career ladder. In Wisconsin, it should fund a faster one.
Gleb Tsipursky, Ph.D., is a behavioral scientist, CEO of Disaster Avoidance Experts and author of “The Psychology of AI Adoption at Work: From Resistance to Results.” He lives in Columbus, Ohio.
Guest commentaries reflect the views of their authors and are independent of the nonpartisan, in-depth reporting produced by Wisconsin Watch’s newsroom staff. Want to join the Wisconversion? See our guidelines for submissions.
The Milwaukee Police Department told NNS it is looking to the future with its policy on generative artificial intelligence, or AI. The department is not currently using the technology, but that could change.
One potential law enforcement use of generative AI is helping officers write police reports.
Some civil rights advocates and defense attorneys say using this type of emerging technology could create problems for Milwaukeeans accused of crimes.
“You have this risk of errors and hallucinations and bias that we see a lot of large language models have, whether it’s a transcription error or if it’s a bias that’s baked into the training data sets,” said Amanda Merkwae, policy and advocacy director for the American Civil Liberties Union of Wisconsin.
Among other requirements are that AI-generated material should be considered a draft and reviewed for accuracy.
Department members should also indicate in the final work product that AI was used.
An MPD spokesperson said its Generative Artificial Intelligence Committee has met to consider a variety of AI products but is still evaluating the utility, cost, accountability and effect that those products may have on the department’s work product.
“Any onboarding of an AI product is only in the consideration phase, so have we given it thought? Yes. Are we anywhere close to implementing that (technology)? No,” the spokesperson said.
What happens at the DA’s office?
Prosecutors in the Milwaukee County District Attorney’s Office have considered what the use of AI technology could mean for criminal cases.
Jeffrey Altenburg, chief deputy district attorney for Milwaukee County, acknowledged risks associated with generative AI but said it could be useful with sufficient human oversight.
“It can be a helpful tool as long as it’s overseen and regulated by actual humans making actual observations and making sure that what is generated is consistent with what was intended to be,” he said.
Deputy District Attorney Matthew Torbenson said prosecutors are not expecting AI-generated reports to capture everything an officer observes.
He gave the example of a child neglect investigation, during which observations — including what a home looks and smells like, whether there is a bug infestation, whether food is available — would have to come from police officers.
“All of that has to come from the impressions of the officers that are on scene,” Torbenson said.
The what ifs
Merkwae said there are concerns about the use of generative AI that should not be ignored.
What happens, for example, if an officer’s testimony later conflicts with an AI-assisted police report?
The error could stem from AI, she said, but it could also raise questions about an officer’s credibility.
“If it was a human-written report and there’s that type of contradiction that can rise to the level of a potential dishonest statement — that could land a prosecutor putting a police officer on the Brady list,” Merkwae said.
The Brady list refers to prosecutors’ records that identify law enforcement officers whose credibility issues may have to be disclosed to defendants.
Connor Romenesko, a forensic science practice coordinator with the Wisconsin State Public Defenders Office, said AI-generated reports could create serious problems without any malice or ill intent on the part of police or prosecutors.
There could be a situation, he said, where an officer is rushed at the end of a shift and fails to adequately review an AI-generated report, and a prosecutor uses that information to charge someone.
A new exhibition in the Madison Museum of Contemporary Art uses generative artificial intelligence to allow viewers to manipulate digital artwork. More than 900 people have signed an open letter calling to shut down the project due to the project’s AI use.
A few months ago, we got an email from a reader seeking advice from journalists covering education and job training.
The reader’s granddaughter will be off to college soon. She and her friends are all wondering how to prepare for a world where artificial intelligence threatens to gobble up so many white-collar jobs.
“Can we predict where the lasting jobs will be?” the reader asked.
The truth: We really didn’t know the answer. But we’re gonna get to the bottom of that and more, by reporting on how AI is changing the job search and the advice colleges give students as they plan their careers.
That’s where you come in. If you’re a student — or know one — help us out by filling out this short form or sharing it. The answers will help us ask better questions and address the real concerns students have.
As AI rapidly changes, well, seemingly everything around us, we’re learning right alongside you. Email me with more questions, as always: mdunlap@wisconsinwatch.org.
Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.
A new wave of concerns over the rapid development of artificial intelligence has been sweeping the country after a former tech worker warned that AI could wipe out the human race within a decade.
U.S. Attorney General Todd Blanche speaks about the administration’s crackdown on fraud during a Sept. 14, 2026, news conference at the FBI field office in Kansas City, Missouri. (Photo by Sherman Smith/Kansas Reflector)
The Trump administration will comply with the U.S. Supreme Court’s order this week blocking new restrictions on mail voting for this year’s elections, but President Donald Trump was right to attack the ruling, U.S. Attorney General Todd Blanche said during a wide-ranging White House press conference Tuesday.
Concerns about the dangers of artificial intelligence are overstated, military action in Iran is not a war and the justices wrongly decided the case in which the Justice Department argued in defense of a U.S. Postal Service rule overhauling vote-by-mail requirements before the election, Blanche told reporters during a roughly half-hour briefing in the White House Rose Garden.
Blanche, who was Trump’s personal attorney before joining the government, began the press conference praising federal prosecutions of terrorism and election fraud suspects.
But he quickly transitioned into a broad defense of recent Trump actions and administration policies.
The Trump administration will continue prioritizing “election security” ahead of this year’s midterms, despite its setback at the Supreme Court on the proposed mail voting regulation, he said.
“Of course we’re going to comply with the Supreme Court’s decision, as we always do,” he said.
“That doesn’t mean that we’re not going to do everything in this administration that we can to make sure that there are free and fair elections,” he added. “There’s this constant pressure and this effort by the media and mostly by Democrats that somehow doing that is a bad thing. Everybody should want that.”
Trump’s morning Truth Social post articulating regret over nominating some Supreme Court justices who have ruled against him was “what a democracy is about,” Blanche added.
“As far as President Trump’s Truth about about the justices, he is very frustrated, and … he has every right, and, indeed, he should communicate his concerns with the Supreme Court whenever he has them,” Blanche said.
“I am also upset about the Supreme Court decision. But the idea that President Trump shouldn’t be allowed to communicate to the American people his frustration, I don’t share that.”
While opining on a host of issues, Blanche declined to comment on potential criminal investigations, including when asked about Minnesota Democratic U.S. Rep Ilhan Omar and longtime public health official Anthony Fauci.
AI as campaign issue
Anxiety about artificial intelligence “conveniently became a flashpoint this week,” Blanche said, suggesting Democrats sought to ramp up discontent ahead of Nov. 3 midterm elections to determine control of Congress.
Asked about how AI should be regulated and if development should be slowed, Blanche said the Department of Justice’s mission is to prosecute, not regulate.
But he echoed Trump’s comments this week that U.S. companies should press forward with the technology to remain competitive with China.
Political figures from both parties have commented on AI policy following a call by the chief executives of top companies for a development slowdown amid disclosures the technology could pose an existential threat to humanity.
“When the leaders of the top AI companies are sounding the alarm about the potential for imminent threats, we need to take them seriously,” Hawaii Democratic Sen. Brian Schatz said Tuesday.
“This is an emergency, and we need to treat it like an emergency. If the risk of AI is anywhere near the level that it has been characterized to be, then we have an obligation to act on a bipartisan basis immediately.”
In the Rose Garden, Blanche questioned whether Democrats were raising the issue in good faith or for an electoral advantage.
“Every Democrat senator suddenly races to a microphone to talk about AI after being eerily silent for months and months and months,” he said. “So to talk about the timing of this as being nothing but an effort to to influence the midterms, I shouldn’t have to say that out loud. Of course, that’s what it is. And that shouldn’t be what drives the decisions that we’re making around AI. We can’t lose the AI race to China, right?”
Hegseth ‘phenomenal’
Asked about the articles of impeachment Kentucky Republican Rep. Thomas Massie introduced Tuesday against Defense Secretary Pete Hegseth, objecting to continued military action in Iran even after the House passed a resolution calling for an end to the war, Blanche said Hegseth was doing “a phenomenal job.”
The Justice Department ensures that all Defense Department activity is lawful, Blanche said.
He added that the conflict should not be categorized as a war.
“You called it a war,” he told the reporter who asked about the impeachment. “I disagree with that characterization, as does most of Congress.”
People look out at Manhattan and beyond at One World Observatory at One World Trade Center in New York City. Twenty-five years after 9/11, the surveillance systems built in its aftermath continue to shape how Americans are watched and policed. (Photo by Spencer Platt/Getty Images)
Twenty-five years after 9/11, the surveillance infrastructure built and expanded in its aftermath has become part of a far larger digital ecosystem — producing tools that can collect and analyze information on a scale unimaginable in 2001.
The terrorist attacks of Sept. 11, 2001, did more than reshape the nation’s approach to terrorism. They changed the architecture of American intelligence and policing. They expanded how government agencies collect, share and analyze information, and brought national security tools deeper into ordinary law enforcement.
The infrastructure built in the attacks’ aftermath has proved remarkably durable. Joint terrorism task forces and fusion centers brought federal, state and local agencies into closer intelligence-sharing networks. New laws expanded the government’s ability to obtain information. And police departments acquired technologies that once belonged largely to the realm of national security.
But the expansion of surveillance did not go uncontested. Civil liberties groups warned that the new powers could erode Americans’ privacy and constitutional protections, while many Americans accepted expanded government surveillance as a necessary tradeoff for safety in the aftermath of the attacks.
The country also entered a period of heightened scrutiny for people perceived as foreign or potentially threatening — with American Muslims and immigrant communities bearing a particularly heavy burden.
Then came the digital revolution.
Quotation
In the days after 9/11, we all realized that what the government did in the next few days to respond could have lasting implications for the civil liberties of Americans.
– Gregory Nojeim, director of the security and surveillance project at the Center for Democracy & Technology
Americans began carrying smartphones, broadcasting their lives on social media and generating enormous amounts of commercially collected data. Police gained access to license plate readers, networks of cameras, cellphone location information and other technologies capable of tracking people and mapping their movements.
Now, artificial intelligence is adding another layer: systems that can sift through those vast stores of information, connect previously separate databases and generate analyses in seconds.
Some surveillance and privacy experts say that the amount of information available to the government — and its ability to make sense of it — has fundamentally changed since 9/11.
That has taken on new urgency as surveillance systems have moved further into everyday life. Automated license plate readers can track where people drive. Facial recognition can help identify people in crowds. Commercial data can reveal where and how people live and travel. And increasingly, artificial intelligence can analyze and connect these streams of information at a speed no human investigator could match.
Those capabilities have raised concerns among some experts and advocates about how surveillance could be used to monitor protests, track immigrants and identify people seeking reproductive healthcare.
Gregory Nojeim, senior counsel and director of the security and surveillance project at the Center for Democracy & Technology, described the post-9/11 era as a “perfect storm.”
“That storm is both the expansion of the legal powers that have been conferred on the government to collect and share information, combined with the advance of technology, which has given the government more tools to collect information from more people in more contexts,” Nojeim said.
From intelligence silos to everyday policing
In the months after 9/11, officials sought to fix a critical weakness exposed by the attacks: Intelligence that could have helped uncover the plot was held across government agencies that failed to connect or share it effectively. The response was a sweeping effort to tear down those silos and build a more integrated intelligence network.
Federal, state and local agencies quickly expanded intelligence-sharing, and the government established and expanded networks designed to move information across traditional institutional boundaries. The FBI’s Joint Terrorism Task Forces brought together federal, state and local law enforcement and intelligence personnel.
Fusion centers, generally run by state and local governments with federal support, became another part of the post-9/11 intelligence architecture, with at least one operating in every state. The centers serve as intelligence hubs where law enforcement agencies can share information, analyze data and flag potential threats across jurisdictions.
Katie Kinsey, chief of staff and tech policy counsel at the Policing Project at the NYU School of Law, said the original goal was straightforward — prevent another terrorist attack.
Over time, some fusion centers began supporting investigations and enforcement involving lower-level crimes, Kinsey said. Local police departments also developed their own versions of centralized intelligence hubs, often called real-time crime centers, that can integrate information from cameras, automated license plate readers and other surveillance systems.
David Viola, an adjunct professor at the Center on Terrorism at John Jay College of Criminal Justice and author of “You Have Unleashed a Storm: New York City’s Descent into Chaos During America’s Most Explosive Era of Radical Violence,” said the post-9/11 period also marked a major shift in the kind of information available to investigators.
Before the attacks, he said, intelligence work relied heavily on traditional investigative techniques. Today, digital records can provide information about where people go, with whom they communicate, what they purchase and what they post online.
But technology is only part of the transformation. Viola said the institutional relationships forged among local, state and federal authorities after 9/11 are among the period’s most lasting legacies.
“These are institutions that have cemented the close coordination between state, local, federal, tribal authorities in the past 25 years, and they’re going nowhere, for better or worse,” he said.
Nojeim, of the Center for Democracy & Technology, was directing lobbyists in Washington, D.C., on 9/11. His office was evacuated as officials tried to determine whether the U.S. Capitol was the target of another hijacked plane.
In the aftermath, he said, civil liberties advocates understood that decisions made in response to the attacks could extend far beyond the immediate crisis.
About a month after the attacks, the USA PATRIOT Act was signed into law, dramatically expanding the federal government’s ability to collect information and conduct surveillance in terrorism investigations. Some of its most sweeping surveillance authorities were later curtailed or allowed to expire, but the law helped establish a new framework for national security surveillance that continues to shape how Americans’ data is collected and monitored.
“In the days after 9/11, we all realized that what the government did in the next few days to respond could have lasting implications for the civil liberties of Americans,” Nojeim said.
The data economy
The growth of surveillance after 9/11 also coincided with a separate transformation that would make those systems far more powerful. Americans were beginning to carry smartphones, use social media and spend more of their lives online, generating enormous amounts of digital information that did not exist before.
Kinsey, of the Policing Project, said that created a new dynamic for law enforcement. Agencies had expanded their ability to collect and share intelligence after 9/11, while technology was producing more information about people than ever before. Much of that information was collected by private companies for commercial purposes, but it could also become available to law enforcement, either through data purchases or when companies turned information over to authorities.
At the same time, Kinsey said, Americans have become accustomed to giving up personal information without necessarily understanding how it is collected or what can ultimately be done with it.
Quotation
The things that we would have taken for granted as forms of privacy we can all expect have just completely vanished.
– Jessica Katzenstein, a cultural anthropologist and assistant professor at Arizona State University
“There’s still a lack of awareness because there’s a lack of transparency on the part of law enforcement, but also on the part of these private tech companies about what they are actually collecting on us, and then what they’re doing with that information,” Kinsey said.
That lack of visibility extends beyond the cameras and other surveillance tools people can see. Personal data can be combined and shared behind the scenes, allowing the government to draw conclusions from pieces of information that may seem insignificant on their own.
“Never in human history has the government had more information about what we are doing, who we are doing it with, what we like to buy, and indeed what we are thinking about, than ever before,” said Nojeim, of the Center for Democracy & Technology.
Jessica Katzenstein, a cultural anthropologist and assistant professor at Arizona State University, said technological advances have also changed what Americans consider normal, making forms of live, mass surveillance that once seemed dystopian increasingly commonplace.
“The things that we would have taken for granted as forms of privacy we can all expect have just completely vanished,” she said.
That normalization can make surveillance difficult to roll back once law enforcement agencies have invested in the technology and incorporated it into their work, she said.
“Once you have a sense of both a need and access to tools, it will be very, very difficult to get you to give that up,” said Katzenstein, who also studies police in the U.S. as an ethnographer.
Communities living with the consequences
The expansion of surveillance after 9/11 also had consequences that were not felt equally. American Muslims faced heightened scrutiny in the name of national security, and advocates say the surveillance practices and assumptions that emerged in that period have since affected other communities of color.
Haris Tarin, vice president of policy and programming for the Muslim Public Affairs Council, who also spent more than a decade working in the U.S. Department of Homeland Security, said many American Muslims experienced the aftermath of 9/11 as a “dual attack.”
“We were attacked twice. First by the terrorists, we were attacked for being Americans, and then we were attacked by our own government and people within our own country, where we were cast under suspicion, and that has continued for the last 25 years,” Tarin said.
Tarin said that suspicion soon extended beyond American Muslims to other communities.
“After 9/11, American Muslims were easy to go after because there was not much political consequence,” he said. “But it just didn’t stop with American Muslims. We’ve seen that now extend to immigrants. We’ve seen that now extend to anti-Semitism. We’ve seen that now extend to anti-Black hate.”
Lia Nitake, senior director of technology, telecommunications and media policy at Asian Americans Advancing Justice, said the consequences have been particularly pronounced for communities of color. She said the heightened surveillance of people based on their race, religion or other aspects of their identity has created a climate of fear.
“In a lot of ways, these surveillance measures have also eroded this idea that everyone should have an equal right to privacy,” Nitake said.
Both Tarin and Nitake said the growing use of artificial intelligence raises new concerns about how those disparities could be reproduced or amplified. Police agencies could increasingly rely on technology to monitor communities rather than invest in relationships with them, Tarin said.
“In the AI age, it will be easy for government agencies and law enforcement agencies to use technology to surveil and not do the hard work of community policing and engaging communities,” he said.
Stronger surveillance systems
Police departments nationwide are already using AI-assisted tools to analyze evidence, search databases, draft reports and translate conversations in real time.
North Carolina Central University Police Chief Robert Gaddy, who previously served as a Durham police officer for more than 25 years, sees the technology as a practical response to the growing demands on modern policing.
Information that once had to be gathered and shared manually can now flow through centralized digital systems, while AI-assisted cameras and license plate readers help officers identify suspects, gather evidence and solve crimes.
“If I can take this technology and at least give that (victim’s) security back to them by solving this crime, it’s worth every every bit of it,” Gaddy said.
Gaddy said technology can also help departments facing staffing shortages. But he said its use requires clear limits and oversight, including rules governing how officers access and share information and audits to identify potential misuse.
Still, some experts and advocates worry that newer AI-assisted systems could make existing surveillance infrastructure significantly more powerful by connecting databases that previously operated separately. Some tools allow officers to search multiple databases using natural-language prompts and generate summaries, raising questions about accuracy, missing information and how much officers may rely on the results.
Nojeim, of the Center on Democracy & Technology, said those concerns become especially serious when AI is used in decisions that can affect someone’s liberty.
“We all know from our work or our play with AI that it can make mistakes and that it hallucinates,” he said. “Now we’re in a world where an AI hallucination can be the thing that set off an investigation that landed you in jail inappropriately.”
Modern law enforcement agencies have access to more information than any human could reasonably process, said Viola, the adjunct professor at John Jay College of Criminal Justice. AI could help investigators identify connections that might otherwise be missed. But Viola said those capabilities also come with risks.
“These are very capable tools that can be used to great effect for the betterment of American society and safety,” Viola said. “They can also be used for ill effect if there is an administration who wants to use them for such activity.”
This story was originally produced by Stateline, which is part of States Newsroom, a nonprofit news network which includes Wisconsin Examiner, and is supported by grants and a coalition of donors as a 501c(3) public charity.
A major national credit rating agency downgraded Oracle’s rating last week, citing uncertainty about the tech giant’s investments in artificial intelligence. The drop comes just weeks after the company sued Wisconsin’s utility regulator over new credit requirements for data center operators in We Energies territory — a lawsuit spotlighting the company’s financial condition.
S&P Global Ratings, one of the “big three” ratings agencies responsible for assessing the creditworthiness of government and corporate debt, lowered Oracle’s rating from a BBB to a BBB- on July 9. The rating places Oracle on the bottom edge of S&P’s “investment-grade” tier; any additional downgrades will land the company’s credit rating in the “high yield” or “junk” tier.
“Oracle Corp.’s rapidly expanding AI infrastructure business is increasing its overall credit risk,” S&P analysts wrote in an announcement of the downgrade, pointing to high capital spending, “an uncertain path to profitability” and stiff competition as reasons to be “more cautious” in its approach to AI infrastructure businesses.
Still, S&P isn’t wholly pessimistic about Oracle’s finances.
“Despite the stretched leverage and cash-flow profile over the next two years, we expect Oracle to demonstrate consistent improvements toward profitability as capacity comes online and business scales,” the analysts added.
Oracle is co-developing a vast new data center campus in Ozaukee County, and its BBB- credit rating adds a hurdle to its efforts to connect the campus’ servers to the grid.
The reason: new rules for data centers seeking electrical service in We Energies territory. Wisconsin’s Public Service Commission (PSC) recently approved a rate structure for We Energies’ “very large customers” that requires operators like Oracle to pay for the construction of new power plants needed to meet data center energy needs.
But constructing a new plant can cost hundreds of millions of dollars, and any unpaid debts tied to the plants could fall to We Energies’ other customers if a data center operator becomes insolvent.
To shield ratepayers from a potential cost shift, the PSC set a AAA- credit rating threshold for data center operators seeking electric service from We Energies. Companies below the threshold must post steep collateral, either in cash or lines of credit, as a backstop.
For Oracle, that could mean paying $100 million or more a year as a condition of receiving electric service for Port Washington servers.
“In practical terms, tens of billions of dollars in Oracle’s value would need to be destroyed before creditors or counterparties, such as Wisconsin Electric and its other customers, could experience losses,” the utility’s lawyers wrote.
Oracle sued the commission in Ozaukee County Circuit Court as a backup to the reopener request. The company’s lawsuit asks Judge Sandy Williams to “set aside, reverse, and remand” the credit rating requirements, arguing that they aren’t “needed to prevent harm” to We Energies’ other customers or shareholders.
In a response filed July 9, the commission accused Oracle of trying to dodge regulatory scrutiny. The company seeks “to overturn over one-hundred years of established caselaw and allow it to dictate one-off preferential terms of service with the utility, bypassing Commission oversight altogether,” commission attorneys wrote.
Wisconsin’s Citizens Utility Board (CUB) and renewable energy advocacy group Clean Wisconsin also weighed in this week to support the credit ratings requirements.
“An investment grade credit rating provides little advance warning of financial difficulties that may worsen rapidly,” CUB attorney Daniel Narvey wrote in a position statement filed Monday in Ozaukee County Circuit Court. “If a data center customer suffered financial distress and had not been required to post collateral, (We Energies) and its other customers could be on the hook for billions of dollars of stranded investments.”
Oracle’s stock value has tumbled by more than 25% in the month since it sued the PSC.
Wisconsin isn’t the only state embroiled in a fight over Oracle’s data center operations. In March, Michigan’s Public Service Commission declined to revisit its approval of an electrical service agreement between utility DTE Energy, Oracle and OpenAI. Michigan’s utility regulator approved the contracts in an expedited, uncontested process that drew criticism from ratepayer advocates and Michigan Attorney General Dana Nessel.
Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.
In a petition to Congress, 200 state lawmakers from around the country, including Wisconsin, are opposing federal plans that would limit local control over regulating artificial intelligence.
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