Elon Musk’s budget-cutter-in-chief role for Trump is a ‘dangerous combination’ that risks creating conflicts of interest with his AI empire

Musk’s deliberate position collides together 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 corporations or hurt rivals.

Richard Painter, former chief White Home ethics lawyer beneath former President George W. Bush and now a College of Minnesota regulation professor, advised Fortune that Trump’s determination to present DOGE an advisory standing moderately than a authorities one was seemingly strategic. In response to Painter, the setup lets Musk and his DOGE co-chief, Vivek Ramaswamy, keep away from divesting their monetary belongings beneath legal guidelines that bar federal staff from taking part in regulation and contracting that might have an effect on their private monetary pursuits.

However, Painter added that advisory committees like DOGE should nonetheless comply with sure guidelines. They embrace making information publicly obtainable, holding public conferences, and permitting public participation. “All people is aware of these folks have conflicts of curiosity, but they’re giving recommendation to the federal government, and that’s okay, however you need to adjust to the transparency provisions,” he mentioned.

Musk’s conflicts span most something involving transportation and communication, and due to this fact the very federal businesses in his crosshairs for funds cuts. His conflicts additionally embrace the fast-moving world of AI, which more and more underpins important applied sciences, shapes international energy dynamics, and raises critical moral and societal questions.

As enterprise capitalist and Trump critic Reid Hoffman lately wrote within the Monetary Occasions, Musk’s direct possession in xAI creates a “critical battle of curiosity when it comes to setting federal AI insurance policies for all US corporations,” elevating crimson flags about Musk’s affect on every part from authorities contracts, to regulating AI corporations, to proscribing expertise exports.

And that’s just the start. Right here’s are a number of the key AI-focused conflicts price listening 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 could have marching orders “to maintain America within the AI forefront” and “work with DOGE to make use of AI to root out waste, fraud and abuse, together with entitlement fraud.” 

May Musk steer authorities AI contracts to his personal firm, xAI? He may, mentioned Richard Schoenstein, vice chair of litigation follow at regulation agency Tarter Krinsky & Drogin. In idea, Schoenstein defined, Musk’s xAI may benefit from favorable contracts, however he may additionally push the federal government to crack down on its rivals like OpenAI and Anthropic. He referred to as Musk’s twin position as businessman and Trump advisor a “harmful mixture.

Musk, for instance, has lengthy complained about authorities forms hurting his companies. Now, he may use his new DOGE position to eradicate any governmental hurdles to xAI, AI typically, or his different enterprise pursuits, mentioned Schoenstein.

Nonetheless, Musk’s stance on AI isn’t at all times simple. For instance, he has supported sure laws of AI like California’s ultimately-doomed SB-1047 invoice, meant to ascertain security requirements for superior AI techniques.

However Musk nonetheless has a stake in future authorities selections round AI, together with how AI corporations can entry knowledge. 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 knowledge to coach xAI’s fashions. As head of DOGE, Musk may help insurance policies that enable the broader use of knowledge for AI improvement, together with doubtlessly loosening person privateness restrictions.

Schoenstein additionally worries concerning the big quantity of personal info Musk has collected about U.S. residents by means of his varied companies. X, xAI, and his Starlink satellite tv for pc web service hoover up huge quantities of details about what customers have a look at on-line and who they’re. He fears that Musk, due to his alliance with Trump, could now be extra prone to share that info with the federal government. “Whereas a number of the social media corporations traditionally have taken a really protecting stance concerning the privateness of their customers, having a man who owns X and owns xAI and owns a satellite tv for pc system, principally in lockstep with the governing administration, is harmful,” Schoenstein mentioned.

AI-powered self-driving

Whether or not Musk will use DOGE to profit the longer term deployment of Tesla’s AI-powered self-driving automobiles 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 could 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 response to a Bloomberg report, Trump’s transition workforce is now in search of NHTSA policymakers to guide efforts on self-driving regulation, seemingly aiming to chill out guidelines to speed up improvement.

Such a change would come at an important juncture for the self-driving business, mentioned Schoenstein. And it wouldn’t require eliminating the company. “You would simply change the management” and set up “a business-friendly head, and that can reduce the enforcement chunk,” he mentioned.

Environmental insurance policies that promote electrical automobiles (EVs) are additionally essential for Tesla’s success. Musk’s DOGE position may assist him form these laws to favor Tesla, doubtlessly by pushing for stricter emissions requirements that profit EV producers or by influencing how subsidies and tax incentives are allotted. For clear transportation advocates, this can be a good factor. However Musk has additionally supported reducing Biden’s $7,500 tax credit score for EVs, which may influence different automakers.

xAI’s Memphis supercomputer

One other potential battle of curiosity entails Colossus, xAI’s new supercomputer in Memphis. Musk has claimed it is going to be the world’s quickest AI supercomputer, and final month mentioned 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 approved the additional electrical energy earlier this month, regardless of residents rights teams and environmental campaigners elevating considerations concerning the ensuing strains on town’s energy grid and the realm’s already poor air high quality. 

The authority is ruled by a board appointed by the president and confirmed by the Senate. A lot 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 actually concern about that relationship,” Amanda Garcia, a senior legal professional on the Southern Environmental Legislation Heart, advised 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 mills 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 mills. Moreover, xAI could have put in and operated them with out securing the required permits, based on 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 beneath scrutiny in DOGE’s oversight.

Garcia identified that Trump’s choose for EPA commissioner, Lee Zeldin, has already talked about eager to make the U.S. a world chief in synthetic intelligence. That assertion, Garcia mentioned, “looks as if an odd factor for an EPA administrator to say,” however seemingly music to the ears of Musk and fellow AI entrepreneurs.  

Conflicts of curiosity aren’t new

Musk’s conflicts of curiosity by means of DOGE could seem unprecedented, nevertheless it’s been an issue earlier than in terms of outdoors advisors. It has even prolonged to AI issues beneath each Trump’s first administration and President Biden, mentioned 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 corporations to the Pentagon. As well as, throughout the Biden administration Schmidt co-chaired the Nationwide Safety Fee on Synthetic Intelligence.

In response to criticism about conflicts of curiosity in his position with the Protection Innovation Advisory Board, Schmidt said 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 mentioned in 2018.

As for Musk, Rotenberg mentioned, he “shouldn’t personally profit from the federal government reform proposals he places ahead—I don’t suppose there ought to be any doubt about that.” Then he added that the issue is way larger than one man. “This has been a protracted working theme, notably within the tech sector, for a few years.”