Donald Trump’s appointment of Elon Musk to lead a new department tasked with cutting government spending comes with a major wrinkle: potential conflicts of interest.
Musk’s planned role clashes with his day job, which runs his business empire that includes the electric automaker Teslarocket company SpaceXX social media platform and AI startup xAI. Many worry that he will use his position in Trump’s inner circle, where he heads the Department of Government Efficiency (DOGE), to overcharge his companies or harm competitors.
Richard Painter, former White House ethics counsel under former President George W. Bush and now a law professor at the University of Minnesota, said. luck Trump’s decision to give DOGE an advisory rather than government status was likely strategic. According to Painter, the setup allows Musk and his DOGE chief, Vivek Ramaswamy, to avoid liquidating their financial assets under laws that bar federal employees from participating in regulation and procurement that could affect their personal financial interests.
But, Painter added that advisory boards like DOGE must follow certain rules. These include making records public, holding public meetings and allowing public participation. “Everybody knows that these people have conflicts of interest, but they are advising the government, which is fine, but you have to comply with the transparency provisions,” he said.
Musk’s conflict includes everything involving transportation and communications, and therefore federal agencies cross-cutting budget cuts. Its conflict also includes the fast-paced world of AI, which increasingly underpins critical technologies, reshapes global power dynamics, and raises serious ethical and societal questions.
As venture capitalist and Trump critic Reid Hoffman wrote recently Financial TimesMusk’s direct ownership of xAI “creates a serious conflict of interest for all U.S. companies with regard to the implementation of federal AI policies,” raising red flags about Musk’s influence on everything from government contracts to regulating AI companies and restricting technology exports.
And that’s just the beginning. Here are some of the main AI-based conflicts worth paying attention to:
AI policies through AI ‘tsar’
Trump is considering appointing one AI tsar As Axios reports, federal and government policies are emerging to coordinate the use of technology. Musk is expected to work closely with whichever AI czar is named, with marching orders to “keep America at the forefront of AI” and to “work with DOGE to root out waste, fraud and abuse in the use of AI, including entitlement fraud.”
Could Musk steer government AI contracts to his company, xAI? It could, said Richard Schoenstein, vice president of the litigation practice at the law firm Tarter Krinsky & Drogin. In theory, Schoenstein explained, Musk’s xAI could benefit from lucrative contracts, but it could also push the government to take on competitors like OpenAI and Anthropic. He called Musk’s dual role as a businessman and Trump adviser a “dangerous combination.”
Musk, for example, has long complained that government bureaucracy hurts his businesses. Now, he could use his new DOGE role to remove all government barriers to xAI, AI in general or his other business interests, Schoenstein said.
However, Musk’s position on AI is not always straightforward. For example, California’s ultimately doomed bill SB-1047 supports certain AI regulations, such as establishing safety standards for advanced AI systems.
But Musk is still involved in future government decisions about AI, including how AI companies can access data. Last month, for example, X quietly updated the privacy terms for Grok, an AI chatbot developed by xAI, to clarify that it uses X data to train xAI’s models. As the head of DOGE, Musk can support policies that allow for broader use of data to develop AI, including loosening user privacy restrictions.
Schoenstein is also concerned about the vast amount of private information Musk has collected about US citizens through his various businesses. X, xAI and its Starlink satellite Internet service collect a wealth of information about what users see online and who they are. He fears that Musk, because of his alliance with Trump, will now be more likely to share that information with the government. “Historically, some social media companies have had a very protective attitude about user privacy, it’s dangerous to own X and xAI and own a satellite system, essentially aligning with government administration,” Schoenstein. he said
Self-driving through AI
Another question is whether Musk will use DOGE to benefit Tesla’s future implementation of AI-powered cars. For years, most recently in a demo in October, it has promised to introduce robotaxis that can transport passengers without a driver.
Musk’s position with DOGE could make him more forcefully advocate for lenient regulations that favor Tesla. For example, the National Highway Traffic Safety Administration (NHTSA), which oversees vehicle safety standards, plays a major role in Tesla’s Autopilot and Full Self-Driving (FSD) features. According to a Bloomberg report, Trump’s transition team is looking to NHTSA policymakers to lead efforts on self-driving regulation, possibly with the goal of relaxing rules to speed up development.
That change would come at a crucial time for the self-driving industry, Schoenstein said. And it wouldn’t require removing the agency. “You can change the leadership” and “install a pro-business head, which will reduce the sting of enforcement,” he said.
Environmental policies that promote electric vehicles (EVs) are also critical to Tesla’s success. Musk’s DOGE role could help shape these regulations to favor Tesla, potentially pushing for stricter emissions standards that benefit EV manufacturers or influencing how subsidies and tax incentives are distributed. For clean transportation advocates, that’s a good thing. But Musk has also agreed to cut Biden’s $7,500 tax credit for electric vehicles, which could affect other automakers.
xAI’s Memphis supercomputer
Another potential conflict of interest is Colossus, xAI’s new supercomputer in Memphis. Musk has said it will be the world’s fastest AI supercomputer, and last month said he wanted to double its computing power.
This would require a a lot of electricity Earlier this year the local utility agreed to supply xAI with 150 megawatts, subject to approval by the Tennessee Valley Authority, a federal utility. VAT accepted additional electricity earlier this month, despite concerns from civil rights groups and environmental activists about strain on the city’s power grid and poor air quality in the area.
The authority is headed by a council appointed by the president and confirmed by the Senate. Most of the current board member’s five-year terms will expire in the next Trump administration, opening the door for him to meet with members who support Musk’s interests. “There’s certainly concern about that relationship,” said Amanda Garcia, senior attorney at the Southern Environmental Law Center. luck.
His organization has complained that it already installs natural gas-burning turbines at the former Memphis factory where xAI’s supercomputer is located. The generators supply electricity directly to the facilities, without relying on the public grid.
Memphis residents and environmental groups have expressed concerns about the pollution created by these gas-fired generators. Additionally, xAI may have been installed and operated without obtaining the required permits, according to Garcia. The local agency has referred the matter to the EPA, which is currently reviewing the matter. Notably, the EPA would be a key agency under scrutiny under DOGE’s oversight.
Garcia noted that Trump’s selection of EPA Commissioner Lee Zeldin has already signaled that the US wants to become a world leader in artificial intelligence. That statement, Garcia said, “seems like an odd thing for an EPA administrator to say,” but it’s likely music to the ears of Musk and AI entrepreneurs.
Conflicts of interest are not new
Musk’s conflicts of interest through DOGE may seem unprecedented, but it’s been a problem before when it comes to outside advisers. It has also extended to the AI issues of the first Trump administration and President Biden, said Marc Rotenberg, president and founder of the Center for AI and Digital Policy.
The former google CEO Eric Schmidt, for example, while a technical advisor to Google parent Alphabet, became chairman of the National Artificial Intelligence Security Committee in 2018, advising on national AI strategies. Beginning in 2016, he also served on the Defense Innovation Advisory Board, which connects technology companies with the Pentagon. In addition, Schmidt chaired the National Artificial Intelligence Safety Commission during the Biden administration.
Schmidt in response to criticism of his conflicts of interest on the Defense Innovation Advisory Board. he said e-mails and other communications were analyzed. So he would not see or report any business between Google or Alphabet and the Department of Defense, he said in 2018.
As for Musk, Rotenberg said, “he shouldn’t personally benefit from the government reform proposals he’s putting forward, I don’t think there should be any doubt about that.” He then added that the problem is much bigger than a man. “It’s been a long-standing issue, especially in the technology sector, for many years.”
