Elon Musk’s appointment by Donald Trump to co-lead a brand new division tasked with slashing authorities spending comes with a serious wrinkle: Potential conflicts of curiosity.
Musk’s deliberate function collides along with his day job working his enterprise empire that features electrical automaker Tesla, rocket firm SpaceX, social media platform X, and AI startup xAI. Many fear he’ll use his place in Trump’s inside circle, main the Division of Authorities Effectivity (DOGE), to supercharge his personal firms or hurt opponents.
Richard Painter, former chief White Home ethics lawyer below former President George W. Bush and now a College of Minnesota legislation professor, informed Fortune that Trump’s determination to provide DOGE an advisory standing quite than a authorities one was possible strategic. In accordance with Painter, the setup lets Musk and his DOGE co-chief, Vivek Ramaswamy, keep away from divesting their monetary belongings below legal guidelines that bar federal workers from collaborating in regulation and contracting that might have an effect on their private monetary pursuits.
However, Painter added that advisory committees like DOGE should nonetheless observe sure guidelines. They embody making data publicly obtainable, holding public conferences, and permitting public participation. “Everybody knows these people have conflicts of interest, yet they’re giving advice to the government, and that’s okay, but you have to comply with the transparency provisions,” he stated.
Musk’s conflicts span most something involving transportation and communication, and due to this fact the very federal companies in his crosshairs for funds cuts. His conflicts additionally embody the fast-moving world of AI, which more and more underpins important applied sciences, shapes international energy dynamics, and raises severe moral and societal questions.
As enterprise capitalist and Trump critic Reid Hoffman lately wrote within the Monetary Instances, Musk’s direct possession in xAI creates a “serious conflict of interest in terms of setting federal AI policies for all US companies,” elevating pink flags about Musk’s affect on the whole lot from authorities contracts, to regulating AI firms, to proscribing expertise exports.
And that’s only the start. Right here’s are a few of the key AI-focused conflicts value being attentive to:
AI insurance policies through the AI ‘czar’
Trump is contemplating appointing an AI czar to coordinate federal coverage and authorities use of the rising expertise, Axios reported. Musk is anticipated to work carefully with any AI czar appointee, who may have marching orders “to keep America in the AI forefront” and “work with DOGE to use AI to root out waste, fraud and abuse, including entitlement fraud.”
May Musk steer authorities AI contracts to his personal firm, xAI? He might, stated Richard Schoenstein, vice chair of litigation observe at legislation agency Tarter Krinsky & Drogin. In principle, Schoenstein defined, Musk’s xAI may benefit from favorable contracts, however he might additionally push the federal government to crack down on its opponents like OpenAI and Anthropic. He referred to as Musk’s twin function as businessman and Trump advisor a “harmful mixture.
Musk, for instance, has lengthy complained about authorities forms hurting his companies. Now, he might use his new DOGE function to remove any governmental hurdles to xAI, AI generally, or his different enterprise pursuits, stated Schoenstein.
Nevertheless, Musk’s stance on AI isn’t at all times easy. For instance, he has supported sure laws of AI like California’s ultimately-doomed SB-1047 invoice, meant to determine security requirements for superior AI programs.
However Musk nonetheless has a stake in future authorities choices round AI, together with how AI firms can entry information. Final month, for instance, X quietly up to date its privateness phrases for Grok, the AI chatbot developed by xAI, to make clear that it makes use of X information to coach xAI’s fashions. As head of DOGE, Musk might assist insurance policies that permit the broader use of knowledge for AI improvement, together with probably loosening consumer privateness restrictions.
Schoenstein additionally worries concerning the big quantity of personal data Musk has collected about U.S. residents by his varied companies. X, xAI, and his Starlink satellite tv for pc web service hoover up huge quantities of details about what customers take a look at on-line and who they’re. He fears that Musk, due to his alliance with Trump, might now be extra prone to share that data with the federal government. “Whereas some of the social media companies historically have taken a very protective stance about the privacy of their users, having a guy who owns X and owns xAI and owns a satellite system, basically in lockstep with the governing administration, is dangerous,” Schoenstein stated.
AI-powered self-driving
Whether or not Musk will use DOGE to profit the long run deployment of Tesla’s AI-powered self-driving vehicles is one other query. For years, most lately at an October demo, he’s promised to introduce robotaxis that may ferry passengers with out drivers.
Musk’s place with DOGE might let him extra powerfully advocate for lenient laws that profit Tesla. For instance, the Nationwide Freeway Site visitors Security Administration (NHTSA), which oversees car security requirements, has a giant say in Tesla’s Autopilot and Full Self-Driving (FSD) options. In accordance with a Bloomberg report, Trump’s transition workforce is now searching for NHTSA policymakers to steer efforts on self-driving regulation, possible aiming to chill out guidelines to speed up improvement.
Such a change would come at an important juncture for the self-driving business, stated Schoenstein. And it wouldn’t require eliminating the company. “You could just change the leadership” and set up “a business-friendly head, and that will lessen the enforcement bite,” he stated.
Environmental insurance policies that promote electrical autos (EVs) are additionally essential for Tesla’s success. Musk’s DOGE function might assist him form these laws to favor Tesla, probably by pushing for stricter emissions requirements that profit EV producers or by influencing how subsidies and tax incentives are allotted. For clear transportation advocates, it is a good factor. However Musk has additionally supported slicing Biden’s $7,500 tax credit score for EVs, which might affect different automakers.
xAI’s Memphis supercomputer
One other potential battle of curiosity entails Colossus, xAI’s new supercomputer in Memphis. Musk has claimed will probably be the world’s quickest AI supercomputer, and final month stated he deliberate to double its computing energy.
That will require a lot of electrical energy. Earlier this yr the native utility agreed to provide xAI with 150 megawatts, topic to approval from the Tennessee Valley Authority, a federal utility. The TVA authorized the additional electrical energy earlier this month, regardless of residents rights teams and environmental campaigners elevating considerations concerning the ensuing strains on the town’s energy grid and the world’s already poor air high quality.
The authority is ruled by a board appointed by the president and confirmed by the Senate. Many of the present board member’s five-year phrases will expire throughout Trump’s upcoming administration, which opens the door to packing it with members who’re pleasant to Musk’s pursuits. “There’s certainly concern about that relationship,” Amanda Garcia, a senior lawyer on the Southern Environmental Regulation Heart, informed Fortune.
Her group has complained about xAI already putting in pure gas-fired generators on the former manufacturing unit in Memphis the place the xAI’s supercomputer is situated. The turbines provide electrical energy on to the power with out counting on the general public energy grid.
Memphis residents and environmental teams have raised considerations concerning the air pollution generated by these gas-powered turbines. Moreover, xAI might have put in and operated them with out securing the required permits, in keeping with Garcia. The native company has referred the difficulty to the EPA, which is at the moment reviewing the matter. Notably, the EPA could be a key company below scrutiny in DOGE’s oversight.
Garcia identified that Trump’s decide for EPA commissioner, Lee Zeldin, has already talked about desirous to make the U.S. a worldwide chief in synthetic intelligence. That assertion, Garcia stated, “seems like an odd thing for an EPA administrator to say,” however possible music to the ears of Musk and fellow AI entrepreneurs.
Conflicts of curiosity aren’t new
Musk’s conflicts of curiosity by DOGE could seem unprecedented, nevertheless it’s been an issue earlier than in terms of exterior advisors. It has even prolonged to AI issues below each Trump’s first administration and President Biden, stated Marc Rotenberg, president and founding father of the Heart for AI and Digital Coverage.
Former Google CEO Eric Schmidt, for instance, whereas nonetheless a technical adviser to Google-parent Alphabet, turned the chair of the Nationwide Safety Fee on Synthetic Intelligence in 2018, advising on nationwide AI methods. Starting in 2016, he was additionally concerned within the Protection Innovation Advisory Board, which connects the tech firms to the Pentagon. As well as, in the course of the Biden administration Schmidt co-chaired the Nationwide Safety Fee on Synthetic Intelligence.
In response to criticism about conflicts of curiosity in his function with the Protection Innovation Advisory Board, Schmidt stated emails and different communications have been screened. He due to this fact wouldn’t see or be briefed about any enterprise between Google or Alphabet and the Protection Division, he stated in 2018.
As for Musk, Rotenberg stated, he “should not personally benefit from the government reform proposals he puts forward—I don’t think there should be any doubt about that.” Then he added that the issue is far greater than one man. “This has been a long running theme, particularly in the tech sector, for many years.”
