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Relativity Networks Raises $22 Million As AI Data Centers Go Bigger

Relativity Networks has raised $22 million as it develops hollow-core fiber technology designed to transmit data faster than conventional fiber and potentially expand where large AI data centers can be built.

The funding, announced Tuesday, was raised through SAFE notes from Rhapsody Venture Partners, Bell Ventures and Faster Than Glass, among others. The company also secured a $40 million follow-on order from an unnamed leading hyperscaler.

Faster Fiber, Lower Latency

Relativity Networks uses hollow-core fiber, a technology that sends light through a hollow chamber rather than traditional glass fiber. The company says this can make data transmission around 30% faster.

According to CEO Jason Eisenholz, a signal takes roughly five microseconds to travel one kilometre through conventional fiber. Hollow-core fiber can reduce that to about 3.5 microseconds.

That difference becomes increasingly important as AI systems grow. Instead of keeping GPUs within a single data center, operators are increasingly spreading computing capacity across multiple buildings or campuses because of power and space constraints.

Extending The Reach Of AI Data Centers

Relativity believes its technology could help connect separate data centers and allow them to function as a single, synchronized system.

Reducing latency by 30% could effectively allow compute infrastructure to span greater distances before network delays become a major limitation.

“The first era of AI optimized for compute,” Eisenholz said. “The second era optimized the networking inside the data center. The third era that we see coming is optimizing the geography.”

AI Is Everywhere, But Consumers Are Growing More Skeptical

AI is advancing rapidly, but public enthusiasm is moving in the opposite direction. Recent surveys show that more Americans are becoming concerned about the technology, while growing opposition to data centers is turning AI’s social acceptance into a business and political challenge.

A Pew Research study found that 52% of Americans are now “more concerned than excited” about the growing use of AI in daily life, up from 37% in 2021. A May Economist/YouGov poll also found that more than 70% believe AI is developing too quickly.

The political backlash is becoming harder to ignore. Axios reported that the National Republican Senatorial Committee warned major AI companies that data center projects could hurt Republican candidates in a key Ohio election.

AI’s Growing Reputation Problem

Public concern is also showing up among younger Americans. A CNBC poll found that most respondents aged 18 to 34 did not trust nine leading AI executives to act responsibly on AI.

For many consumers, AI is increasingly associated with chatbots, AI-powered search and features appearing inside everyday products, rather than with major improvements to their lives. Google has transformed Search with AI, while companies are adding AI to products ranging from email to televisions.

At the same time, people are hearing about AI being used by students to cheat, while companies face disputes over copyrighted material used to train models and generate art, music, video and writing.

That combination is creating a difficult perception: consumers are being asked to accept the disruption caused by AI without necessarily seeing enough personal benefit in return.

Data Centers Add To The Backlash

The problem extends beyond software. Tech companies are spending enormous sums building AI data centers, but communities are increasingly pushing back over issues including electricity demand, water use and infrastructure.

According to The Wall Street Journal, companies are responding with additional incentives such as employment commitments and investments in local infrastructure. One Louisiana project even included $50,000 bonuses for teachers.

Meanwhile, some consumers are gravitating toward technology that feels deliberately less connected. Young people are showing renewed interest in dumbphones, point-and-shoot cameras, cassette players and CD players. AI-free classic iPods are also attracting attention, while offline hobbies and in-person activities are gaining popularity.

The Industry Is Starting To Take Notice

Some technology executives believe the backlash is partly a communication problem. Others are increasingly acknowledging that consumers may understand AI perfectly well but simply don’t consider its current benefits worth the trade-offs.

Airbnb CEO Brian Chesky recently said on a podcast that the industry needs to build products that ordinary people genuinely value, rather than focusing primarily on AI itself.

Anthropic CEO Dario Amodei similarly described negative perceptions of AI as a “big problem” and a “crisis of trust” in a post on X. In his view, the strongest response would be for AI companies to actually deliver on their biggest promises, including breakthroughs that could significantly improve people’s lives.

For an industry that has attracted hundreds of billions of dollars on the expectation that AI will transform everyday life, technological progress alone may no longer be enough. The bigger challenge could be convincing people that they are actually better off because of it.

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