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Eric Schmidt: A Conflict of Interest

Ethics and Eric Schmidt are rare bedfellows. The former Google/Alphabet CEO/Chairman exudes a sense of predatory self-interest, always making the point that what he wants aligns with what is supposedly good for the United States.

He has splashed money on numerous projects, including such artificial intelligence outfits as Rebellion Defense, all the time maintaining uncomfortably close ties to the government advisory circuit. For years, he has been hectoring the Department of Defense to uncritically embrace AI, in other words, machine-learning technology. “You absolutely suck at machine learning,” Schmidt boldly told General Raymond Thomas in July 2016, head of US Special Operations Command. “If I got under your tent for a day, I could solve most of your problems.”

His efforts to get under that tent were already well underway. In the 2000s, Schmidt began shaping Google’s cloud computing and AI capabilities, readying it to be a recipient of DoD contracts. But the speed of such technological adoption proved infuriatingly slow. “I am bizarrely told by my military friends that they have moved incredibly fast, showing you the difference of time frames between the world I live in and the world they live in.”

During the Obama administration, he was highly placed on the regular guest list, and was even brought in to do some cleaning when the launch of the government’s healthcare.gov website was botched. (Since then, he has drummed the narrative that healthcare would also benefit from a “combination of cloud, deep neural networks”.)

Thanks to WikiLeaks, we also know how deeply involved Schmidt was in Hillary Clinton’s presidential campaign. “He’s ready to fund, advise [sic] recruit talent, etc.,” wrote Clinton’s excited confidante and advisor John Podesta in a 2014 email. Preferring to avoid the direct donations route, focus was instead placed upon the stealthy funding of start-ups packed with engineers and analysts crunching campaign data for advertising and voter-turnout operations.

As chair of the National Security Commission on Artificial Intelligence (NSCAI), a body formed in 2018 to advise both the White House and Congress, Schmidt formally entered the world of federal advisory committees, dubbed by the Project on Government Oversight the “fifth arm of government.” A 2010 bill passed in the House of Representatives prohibiting the appointments of commission members with conflicts of interest failed to get traction in the Senate.

A mere five months after his appointment to the NSCAI, an investment by Schmidt was made in the British start-up company Beacon, which combines chain finance with technology to identify, as the Financial Times puts it, “the most cost-effective shipping routes for cargo.” This also included contributions from Amazon’s Jeff Bezos and Uber founder Travis Kalanick. The whole gang, it seemed, was in on the act.

Schmidt also found himself as chair of the Defense Innovation Board, created in 2016 to establish a bridge between Silicon Valley and the US military complex. Its more formal mission is to provide senior officials in defence “with independent advice and recommendations on innovative means to address future challenges through the prism of three focus areas: people and culture, technology and capabilities, and practices and operations.”

The Board did more than just build a bridge, beating and ultimately knocking down the doors of government in getting its way. The October 2019 recommendations by DIB on AI ethical principles were wholly adopted by the US Secretary of Defense, Mark T. Esper, in February 2020. In the words of the Pentagon, “These principles will apply to both combat and non-combat functions and assist the US military in upholding legal, ethical and policy commitments in the field of AI.”

Schmidt repaid the favour in a flattering statement of approval. “Secretary Esper’s leadership on AI and his decision to use AI Principles for the Department demonstrates not only to DoD, but to countries around the world, that the US and DoD are committed to ethics, and will play a leadership role in ensuring democracies adopt emerging technology responsibly.”

The Biden administration ensured that the Big Tech focus, and its entanglement with government, would continue unabated. Rebellion Defense, and for that matter the entire Schmidt investment universe, obtained plum positions of influence. Schmidt Futures is also intimately involved in the funding of office staff at the White House Office of Science and Technology Policy (OSTP), an institutionally unacceptable state of affairs justified by the body’s chronic underfunding.

The nature of such arrangements, partly covered by the American Prospect last year, meant that Schmidt was essentially advising, and berating federal entities, to advance a cause central to his own entrepreneurial projects. Investments could be made in national security start-ups that could, in time, be sold back to the government, harmonious if you’ve got the gig, terrible if you are interested in transparent transactions.

As John Davisson, senior counsel for the Electronic Privacy Information Center, described it, “He’s got many, many financial incentives to ensure that the Department of Defense and other federal agencies adopt AI aggressively.”

For those who feel that accountable partitions should be maintained between big business and government, the tale of Schmidt’s investment activities is woefully unethical. Walter Shaub, a senior ethics fellow at the Project on Government Oversight makes the obvious point: “It’s absolutely a conflict of interest.”

For the cut and thrust go-getters who see little problem in advisors holding government advisory positions who make recommendations that only advance their causes and personal wealth, such conduct is admirable. Schmidt, an unelected official, essentially shaped the rules and regulations of an emerging industry he has a vast stake in.

All in all, over 50 investments in AI companies were made as chairman of the federal commission on AI. For a person bothered about AI and its ethical frameworks, Schmidt has shown himself to be distinctly free of ethics in terms of corporate governance and accountability. “The ethics enforcement process in the executive branch is broken, it does not work,” a resigned Craig Holman of consumer advocacy organisation Public Citizen told CNBC. “And so the process itself is partly to blame here.” Well, only partly.

 

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