David Sacks, a prominent adviser to former President Donald Trump on issues of artificial intelligence and cryptocurrency, is facing scrutiny over government ethics waivers that allow him to influence U.S. policy while retaining numerous investments in the tech sector. Sacks, a venture capitalist linked to the so-called “PayPal Mafia,” has been pivotal in guiding policy related to AI, particularly through a recent executive order instructing the Justice Department to challenge state laws regulating AI that are considered burdensome to the industry.
Ethics experts are raising flags about the scope of these waivers, which are generally designed to justify hiring former industry insiders for government roles while ensuring transparency regarding their investments. Despite divesting from some high-profile tech stocks like Amazon and Meta, Sacks and his firm, Craft Ventures, still hold over 400 investments in various tech firms connected to AI. Kathleen Clark, an ethics authority, criticized the waivers as “sham ethics waivers,” lacking rigorous analysis that would ensure public policies are made in the interest of the public.
The narrative around Sacks shifted notably after The New York Times published an investigation highlighting the ethical implications of his business interests coinciding with his governmental role. In response, numerous figures from the tech community, including billionaire Salesforce CEO Marc Benioff, publicly defended Sacks, calling attention to his significance in the current technological landscape. Sacks has gone so far as to hire a defamation law firm to counter what he perceives as misrepresentations by the Times.
Amidst this backdrop, Sacks has continued to co-host the podcast “All-In,” using the platform to defend his financial choices while claiming he acted with the approval of the Office of Government Ethics. He insists that his role in the government has been a financial loss rather than a gain.
The executive order that Sacks helped shape aims to override over 100 existing state laws on AI, many of which address deepfake technology and require transparency in AI models. Silicon Valley has largely lauded this move, indicating that a federal framework is necessary to foster innovation without the hindrance of inconsistent state legislation.
However, not all voices in the tech and political arenas agree with Sacks’ approach. Steve Bannon, Trump’s former chief strategist, has emerged as a notable opponent, advocating for a pause on advancing AI technologies until their implications are better understood. Bannon questions Sacks’ judgment and focus, arguing that current regulations for AI are alarmingly inadequate compared to those governing simpler professions like nail salons.
Concerns also loom over the potential economic fallout if the current AI investment bubble bursts. Critics fear that Sacks’ influence might lead to pressure for a taxpayer-funded bailout for the tech sector, an issue he recently faced scrutiny over following his advocacy for a government rescue of Silicon Valley Bank two years ago.
Sacks has attempted to assuage fears surrounding a potential bailout, stating that a major AI lab failure would simply lead to new players entering the market. Yet, his subsequent comments about the pace of AI investments suggest ambiguity—the fear among critics is that if a crash occurs, the very individuals profiting from these investments could turn to the government for financial rescue.
