I imagine every side jumping on the water issue is exactly trying to distract from this. You'll notice you hear about water consumption issues much more than oligarchy and wealth inequality on "progressive media".
With the planet heating up at an enormous pace and we have a new hip word called "Water Scarcity" with a cool map (https://en.wikipedia.org/wiki/Water_scarcity#/media/File:Wat...),
I don't think this is a distraction.
We can walk and chew gum at the same time. We can call out wealth inequality and oligarchy, and also talk about the very real water issue with regard to data centers (and electricity, and loss of rural land, and other many other aspects).
I'm all for responsible water use in data centers and I don't doubt that the cheapest, most environmentally destructive option is the one being used. That should be talked about, pushed back against, etc.
However, let's not argue in bad faith and say that we can walk and chew gum at the same time, and then quietly forget about the walking (oligarchy/wealth inequality/decreasing quality of life/increasing cost of life, etc) while everyone yells and throws water stats around.