Ernst & Young Marks META-US Data Center Transaction as Critical Audit Matter

Ernst & Young has designated Meta Platforms (META-US)'s $27 billion data center transaction as a critical audit matter, noting the company used accounting arrangements to remove the Hyperion data center from its balance sheet, involving significant judgment and risk. Meta moved the Hyperion project into a joint venture with Blue Owl Capital in October 2025, holding 20% and with Blue Owl's funds owning 80%. Blue Owl's parent, Beignet Investor, issued $27.3 billion bonds, setting a new record. The joint venture is classified as a variable interest entity (VIE), and Meta claims not to be the primary beneficiary, thereby excluding its assets and liabilities from its consolidated financials. While Ernst & Young accepted Meta's accounting treatment, the audit report highlights the judgment required to determine which activities most affect the VIE's economic performance. Congressional concerns have risen, with four Democratic senators, including Elizabeth Warren, writing to the Financial Stability Oversight Council (FSOC) on January 22, 2026, to investigate risks posed by AI-related financing. They warned of increasingly complex and opaque arrangements that can obscure a company's financial position, citing the Meta-Blue Owl joint venture as a representative example.