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Kevin O'Leary Called Data Center Critics Chinese Agents. Now He's Getting Sued — and Every Founder Should Be Watching

Let me tell you something straight up. I've been running hosting infrastructure for over a decade — real servers, real networks, real customers who pay me real money every month. And in all that time, I've never once had to accuse someone of being a foreign agent just because they questioned where I wanted to build a data center.

But Kevin O'Leary? Apparently that's how he does business.

If you haven't been following this story, here's the short version: the "Shark Tank" star is behind the Stratos Project Area — a massive AI data center development in Box Elder County, Utah. We're talking 40,000 acres. Sixty-two square miles of data center. That's not a server room, folks. That's a small city built to run AI workloads for the hyperscaler crowd.

And when some local organizations and residents had the audacity to oppose it, O'Leary went on Fox News and accused them of being Chinese government operatives.

Now they're suing him. And Fox News. And the whole thing is a masterclass in how the data center gold rush is bringing out some of the ugliest behavior in our industry.

The Facts — Because You Need to Know What Actually Happened

Let me lay this out cleanly because the details matter.

On May 11, 2026, O'Leary appeared on Fox News with Maria Bartiromo and claimed that opposition to the Stratos data center was being orchestrated by — I'm quoting directly here — "two cells inside of Utah" operating on behalf of the Chinese Communist Party. He named names. He called out the Alliance for a Better Utah, a Salt Lake-based nonprofit, and Elevate Strategies, a political consulting firm. He specifically identified Joshua Kanter and Gabrielle Finlayson by name on national television.

Bartiromo didn't push back. According to the lawsuit, she "legitimized O'Leary's statements, affirming that his conclusions were consistent with stories Fox previously ran." The network let it ride. O'Leary posted clips across his social media. Fox ran the segment. And then they kept inviting him back — the lawsuit says Fox brought O'Leary on air at least five times in three weeks to repeat the allegations, without ever contacting the people he was accusing for comment.

Then something interesting happened. On June 25 — after the plaintiffs sent a legal demand — O'Leary posted on social media saying he had no evidence tying these groups to China or the Chinese Communist Party. He backed off. Fox News apologized. Utah state Sen. Todd Weiler, who had shared the allegations, posted: "Oops. I was duped. Sorry everyone."

Funny how that works when there's a lawsuit breathing down your neck, ent?

But here's the thing: the damage was already done. The lawsuit alleges that Elevate Strategies lost clients. The Alliance for a Better Utah saw its fundraising dry up. Finlayson put it best in a statement: "I spent years building my reputation, my business and the trust of my community. In just weeks, Kevin O'Leary tore it all down with lies."

Now they're seeking a jury trial, punitive damages, and compensatory damages for reputational harm and lost economic opportunity. Matthew Platkin — a former New Jersey attorney general — is representing them. O'Leary's lawyer called the lawsuit a "cash grab" and said they'll counter-sue. Fox said it "publicly corrected the record" and will "vigorously defend."

What This Means for the Data Center Industry

Now let me tell you why this matters beyond the court case.

We're in the middle of the largest infrastructure buildout in the history of technology. The hyperscalers — Amazon, Google, Microsoft, Meta — are spending a combined $725 billion on AI infrastructure this year. That's up 77% from last year. And projects like Stratos are how that money gets turned into concrete and power lines and cooling towers.

But here's what the hyperscalers and their investors don't want to talk about: people don't always want these things in their backyard. And when they object, they're not foreign agents. They're residents who have legitimate concerns about water usage, power consumption, environmental impact, and the character of their communities.

The Stratos project is 40,000 acres. Let me put that in perspective for you. That's larger than the island of Manhattan. Twice. In the Utah desert. Using water and power that could serve hundreds of thousands of homes. And when people asked questions about that, the response from O'Leary wasn't to address their concerns. It was to accuse them of being CCP plants.

That's not just wrong. It's dangerous. It's the kind of play that poisons legitimate public discourse around infrastructure development. And it makes every data center project harder to build — even the ones that are done right.

The Media Complicity Problem

I want to spend a minute on Fox News's role here, because it's not getting enough attention.

The lawsuit isn't just against O'Leary — it's against Fox News Network itself. And for good reason. According to the court filing, Fox brought O'Leary on air five separate times over three weeks to repeat the allegations. They never contacted the plaintiffs for comment. They never pushed back on air. They just let a guest with a financial interest in the project accuse American citizens of being foreign agents, and they amplified it across their platform.

This is the same playbook we've seen before, just with a different target. A powerful figure makes an explosive accusation. A cable network gives it airtime. The accusation spreads on social media. Politicians repeat it. And by the time anyone bothers to check the facts, the damage is done.

Bartiromo apologized. Fox said it corrected the record. But the plaintiffs allege that at least three of O'Leary's appearances were still available on Fox platforms and affiliated YouTube accounts at the time the lawsuit was filed. That's not a correction. That's trying to have it both ways.

And look — I'm not here to pile on Fox. Every major network has done versions of this. But when a TV personality calls American citizens Chinese agents because they asked questions about a data center, and a cable news network spends three weeks amplifying it without a single fact-check, we've got a problem that goes beyond any single lawsuit.

The Hyperscaler Money Behind It All

Here's the part that gets interesting from a business perspective.

O'Leary is the face of the Stratos project, but he's not writing the checks. The Military Installation Development Authority (MIDA) — a Utah state entity — approved the project. And behind it all are the same forces driving the $725 billion hyperscaler capex wave. Someone's going to build the infrastructure to run all those AI workloads. And whoever controls that infrastructure controls a massive piece of the future economy.

But here's what the hype cycle doesn't tell you: building data centers at this scale is hard. It's politically hard, environmentally hard, and logistically hard. You need power. You need water. You need fiber. You need local governments to approve it. And you need the people who live nearby not to hate you.

When you skip the last step — when you try to bulldoze community opposition by smearing your critics as foreign agents — you're not solving the problem. You're kicking the can down the road to a courtroom. And that courtroom is going to cost you a lot more than a honest community engagement process would have.

What Smart Founders Should Take From This

Alright, let me get practical. Because if you're running a hosting company, a SaaS business, or any infrastructure-adjacent operation, there are real lessons here.

First: The data center gold rush is creating enemies you don't see coming. The hyperscaler buildout is generating real, legitimate backlash at the local level. And that backlash is going to affect everyone in the hosting ecosystem — including independent providers who have nothing to do with the mega-projects. Zoning laws, power availability, public sentiment — all of it shifts when people feel like they're being run over by corporate interests.

Second: Never bet your reputation on someone else's smear campaign. The Utah politicians and media figures who amplified O'Leary's claims without verifying them are now exposed. Some of them have apologized. But the reputational stink doesn't wash off that easily. In the hosting business, your word is your bond. If you share something you haven't verified, you're trading your credibility for someone else's agenda. Don't do it.

Third: Community engagement isn't optional — it's the whole game. Independent hosting providers understand this intuitively because we deal with individual customers. We can't afford to ignore complaints or dismiss concerns. The hyperscaler model of "build first, ask forgiveness later" only works when you have an army of lawyers and a media machine. For the rest of us, being a good neighbor is not just the right thing to do — it's the only sustainable strategy.

The Independent Provider Opportunity

Here's the part that gives me some hope.

Every data center fight like this one creates an opening for independent providers who do it right. While the mega-projects are fighting lawsuits and smearing critics, smaller colocation facilities and independent hosting operations are quietly serving their customers, paying their taxes, and being part of their communities.

I've said it before and I'll say it again: the hyperscaler model of centralized, monolithic infrastructure is not the only path forward. Distributed, regional data centers — smaller facilities closer to where the customers actually are — avoid a lot of these problems. They require less power. They don't need 40,000 acres. They can be good neighbors because they're built by people who actually live in the community.

The $725 billion capex wave is real. But it's not the whole story. The independent hosting renaissance is happening in parallel, and stories like this one are why more businesses are looking at alternatives.

The Bottom Line

Kevin O'Leary is going to have to answer for what he said in a courtroom. That's how it should work. You don't get to call American citizens foreign agents on national television, then say "my bad" six weeks later when you're facing a lawsuit, and expect everything to be fine.

But the bigger question — the one that keeps me up at night — is about what happens to public trust when the people building our digital infrastructure treat their critics like enemies. The data center industry is going to need public support to keep growing. Every unnecessary fight, every smear campaign, every "cash grab" accusation lobbed at legitimate critics makes that harder for everyone.

We can do better than this. We have to do better than this. Because at the end of the day, a data center isn't just a building full of servers. It's part of a community. And communities deserve better than being told their concerns are evidence of foreign interference.

Now if you'll excuse me, I've got a support ticket to answer and a server rack to balance. Some of us still do this the old-fashioned way — one customer at a time.

— Allan Ali, Founder