Artificial intelligence company Anthropic announced a $50 billion investment in computing infrastructure on Wednesday that will include new data centers in Texas and New York.
Microsoft also on Wednesday announced a new data center under construction in Atlanta, Georgia, describing it as connected to another in Wisconsin to form a “massive supercomputer” running on hundreds of thousands of Nvidia chips to power AI technology.
The latest deals show that the tech industry is moving forward on huge spending to build energy-hungry AI infrastructure, despite lingering financial concerns about a bubble, environmental considerations and the political effects of fast-rising electricity bills in the communities where the massive buildings are constructed.
Anthropic, maker of the chatbot Claude, said it is working with London-based Fluidstack to build the new computing facilities to power its AI systems. It didn’t disclose their exact locations or what source of electricity they will need.
Another company, cryptocurrency mining data center developer TeraWulf, has previously revealed it was working with Fluidstack on Google-backed data center projects in Texas and New York, on the shore of Lake Ontario. TeraWulf declined comment Wednesday.
A report last month from TD Cowen said that the leading cloud computing providers leased a “staggering” amount of U.S. data center capacity in the third fiscal quarter of this year, amounting to more than 7.4 gigawatts of energy, more than all of last year combined.
Oracle was securing the most capacity during that time, much of it supporting AI workloads for Anthropic’s chief rival OpenAI, maker of ChatGPT. Google was second and Fluidstack came in third, ahead of Meta, Amazon, CoreWeave and Microsoft.
Anthropic said its projects will create about 800 permanent jobs and 2,400 construction jobs. It said in a statement that the “scale of this investment is necessary to meet the growing demand for Claude from hundreds of thousands of businesses while keeping our research at the frontier.”
Microsoft has branded its two-story Atlanta data center as Fairwater 2 and said it will be connected across a “high-speed network” with the original Fairwater complex being built south of Milwaukee, Wisconsin. The company said the facility’s densely packed Nvidia chips will help power Microsoft’s own AI technology, along with OpenAI’s and other AI developers.
Microsoft was, until earlier this year, OpenAI’s exclusive cloud computing provider before the two companies amended their partnership. OpenAI has since announced more than $1 trillion in infrastructure obligations, much of it tied to its Stargate project with partners Oracle and SoftBank. Microsoft, in turn, spent nearly $35 billion in the July-September quarter on capital expenditures to support its AI and cloud demand, nearly half of that on computer chips.
The tech industry’s big spending on computing infrastructure for AI startups that aren’t yet profitable has fueled concerns about an AI investment bubble.
Investors have closely watched a series of circular deals over recent months between AI developers and the companies building the costly chips and data centers needed to power their AI products. Anthropic said it will continue to “prioritize cost-effective, capital-efficient approaches” to scaling up its business.
OpenAI had to backtrack last week after its chief financial officer, Sarah Friar, made comments at a tech conference suggesting the U.S. government could help in financing chips needed for data centers. The White House’s top AI official, David Sacks, responded on social media platform X that there “will be no federal bailout for AI” and if one of the leading companies fails, “others will take its place,” though he also added he didn’t think “anyone was actually asking for a bailout.”
OpenAI CEO Sam Altman later confirmed in a lengthy statement that “we do not have or want government guarantees” for the company’s data centers and also sought to address concerns about whether it will be able to pay for all the infrastructure it has signed up for.
“We are looking at commitments of about $1.4 trillion over the next 8 years,” Altman wrote. “Obviously this requires continued revenue growth, and each doubling is a lot of work! But we are feeling good about our prospects there.”
Is it a good sign or a bad sign that the biggest player in an emerging industry actively making trillion-dollar commitments that are artificially propping up the economy is asking for government support, and representatives of the government are weighing in on it? Asking for a friend.
Yesterday, OpenAI’s CFO Sarah Friar made headlines when she said during an appearance on the Wall Street Journal’s Tech Live event that she expects the federal government will provide a “backstop” to guarantee the company will be able to finance its massive and rapidly expanding infrastructure of data centers. The same day, Sam Altman appeared on Tyler Cowen’s “Conversations with Tyler” podcast and said, “Given the magnitude of what I expect AI’s economic impact to look like, I do think the government ends up as the insurer of last resort.”
Now, to the average listener, it may sound like multiple members of OpenAI’s C-suite asking for the federal government to guarantee that it won’t let the company fail should, say, it turn out to not be able to generate anywhere near the revenue it has projected or pay back the massive financial promises it has made. But, rest assured, they insist that is not what they meant by the words that they chose to say.
In a LinkedIn post, Friar walked back the “backstop” phrasing, which she said “muddied the point” that she was making (go ahead and ignore the fact that when the interviewer followed up to ask her if she specifically meant a “federal backstop for chip investment,” she replied, “Exactly”). Instead, she said that what she meant to say was “American strength in technology will come from building real industrial capacity, which requires the private sector and government playing their part.”
Altman also got in on the post-talk corrections, saying in a long X post, “We do not have or want government guarantees for OpenAI datacenters. We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market.” Instead, he clarified, “the one area where we have discussed loan guarantees is as part of supporting the buildout of semiconductor fabs in the US, where we and other companies have responded to the government’s call and where we would be happy to help,” which he noted is “different from governments guaranteeing private-benefit datacenter buildouts.”
So okay, OpenAI was definitely not asking for government money to help it make good on its financial commitments that many times outpace its current revenue. Which is good, because at least one government representative said they wouldn’t get it if they were asking.
David Sacks, Donald Trump’s AI czar (who seems to still hold that title despite the 130-day limit on special government employees), took to X to say, “There will be no federal bailout for AI.” Instead, Sacks said, “we do want to make permitting and power generation easier. The goal is rapid infrastructure buildout without increasing residential rates for electricity.”
Great, seems like everyone is on the same page! OpenAI is definitely not asking for the federal government to provide financial guarantees for its seemingly endless spending spree on data center commitments that it needs to keep its operation afloat, and the federal government is definitely not offering that money over fears that the company at the center of the economy’s only growth sector could go belly up. Everything seems very normal and on the level here, glad we got that all sorted out.
The discourse over AI regulation is heating up and spilling out on social media.
White House crypto and AI czar David Sacks and billionaire LinkedIn co-founder Reid Hoffman exchanged barbs after Hoffman expressed his support for Anthropic’s approach to AI innovation and safety in a thread posted to X on Monday.
“The leading funder of lawfare and dirty tricks against President Trump wants you to know that ‘Anthropic is one of the good guys.’ Thanks for clarifying that. All we needed to know,” Sacks posted on social media platform X.
Hoffman, who is also a major Democratic donor and AI optimist, responded minutes later. He accused Sacks of not actually reading the thread in which he advocates for “a light-touch regulatory landscape that prioritizes innovation and enables new players to compete on level playing fields.” He also referenced Microsoft, Google and OpenAI as “trying to deploy AI the right way.”
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“When you are ready to have a professional conversation about AI’s impact on America, I’m here to chat,” Hoffman wrote. “Also: crying ‘lawfare and dirty tricks’ is particularly rich, given the Trump Administration’s recent actions.”
Shows you didn’t read the post (not shocked).
When you are ready to have a professional conversation about AI’s impact on America, I’m here to chat.
Also: crying “lawfare and dirty tricks” is particularly rich, given the Trump Administration’s recent actions. https://t.co/Qg1sVr3QpS
In a wide-ranging conversation prior to the social media spat (and on the heels of an event called Entrepreneurs First Demo Day in San Francisco), Hoffman spoke to Inc. about his approach to AI regulation, describing it as “iterative deployment and development,” rather than preemptive, fear-based rulemaking. He compared it to how motor vehicles preceded the introduction and mandate of seatbelts.
“Let’s limit the regulatory stuff to transparency, monitoring, accountability, to get a good sense of what’s actually going on, and then only impose when we know that there’s something potentially catastrophic,” he says.
Some critics worry, however, that lawmakers are not informed enough to craft meaningful regulations for technology that is changing as rapidly as AI, whereas others blame regulatory inaction on lobbying and campaign contributions. Hoffman says that he believes frontier AI labs can help govern themselves.
“When I was on the board of OpenAI, part of what we were doing was trying to make sure all the top labs were talking to each other about how to do safety the right way, but it grew more and more tense with regulators,” he says.
“It’d be useful to have some kinds of cross-collaboration on what is good alignment, what is good safety,” he adds.
Hoffman’s uneasy relationship with the Trump administration precedes the October X feud. In late September, Trump mentioned Hoffman as a possible target of a probe along with George Soros, after a Reuters reporter asked him who he might investigate in connection with domestic terrorism, Reuters reported. Trump was signing a memorandum meant to crack down on domestic terrorism and political violence several days after he signed an executive order designating anti-fascism or “Antifa” a domestic terrorism organization. Both Soros and Hoffman are substantial donors to the Democratic Party, and Hoffman also helped to fund E. Jean Carroll’s lawsuit against the president through a nonprofit, CNBC reported.
Hoffman tells Inc. that these developments have not changed his politics, although he has been “careful about trying to fund stuff very directly.”
Hoffman describes himself as “very pro-American society, very pro-American prosperity and business.”
“As far as I’m aware,” he says, “Antifa is a fictional organization and I certainly would never have deliberately funded anything that would support domestic terrorism.”
Hoffman also says he has not backed pro-AI super PACs, two of which emerged in one week in September to support AI-friendly politicians regardless of political affiliation,The New York Times reported. Tech titans have also been spotted hobnobbing with the president, including at a September dinner at the White House. Executives including Meta’s Mark Zuckerberg, Apple’s Tim Cook and Microsoft’s Bill Gates reportedly discussed various AI-related investments and educational initiatives, while also praising the president. Hoffman says the fawning “could be a little silly,” but says he believes business leaders do have a role to play in U.S. politics.
“Especially in democracies, it’s very important for all business leaders to be in collaboration [and] discussion with the elected leaders,” Hoffman says. “Technology sets the drumbeat about what happens with society, what happens with industries and so forth, and so I think that dialog is extremely important.”
Hoffman has himself co-founded two AI-powered startups in recent years. He co-founded Inflection AI together with Mustafa Suleyman and Karén Simonyan in 2022, to create a more empathetic large language model. The company pivoted in 2024 after Microsoft paid a fee to license its technology and hired away much of its top talent. And earlier this year, he launched a new venture, Manas AI, to leverage AI to cut down on the time and costs inherent to therapeutic drug discovery.
Regulation can be good for technology, so long as it’s done thoughtfully, according to LinkedIn co-founder, investor, and AI-enthusiast Reid Hoffman. Speaking on the heels of a pitch event in San Francisco called Entrepreneurs First Demo Day, he compared AI regulation to seatbelts in vehicles.
“Seatbelts are a good thing, relative to the fact that regulatory stuff can have a positive impact on society, technology evolution. Now doing it smart in the right way is important,” he tells Inc. “You don’t try to solve everything before you get on the road. You get on the road and then solve it as you go,” he adds. His voice joins a chorus of others from big names in tech speaking up about how much—or in the case of legendary investor Marc Andreessen and companies like Meta—how little regulation they support.
Hoffman sits on the board of Entrepreneurs First, an international talent investment firm that hosts incubator-style programs and related annual pitch competitions. Those events are called Demo Days, and the most recent took place in San Francisco on Wednesday. Hoffman joined EF’s board after leading a significant round of investment in the company in 2017 through his capacity at venture capital firm Greylock Partners.
Hoffman was not on the ground at Demo Day this year, but another big name in tech was: Anthropic co-founder Jack Clark was the keynote speaker in conversation with Entrepreneurs First CEO Alice Bentinck.
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Just a few days prior, Clark had made waves for commentary he gave at The Curve conference in Berkeley, California, and later published in essay form in his newsletter. He compared AI to a “mysterious creature” of humanity’s own creation. He said he was optimistic about its potential as well as appropriately afraid of it, especially if AI’s goals are not absolutely aligned with humanity’s. And finally, he ended by emphasizing the need for conversations with a broad swathe of society to help craft a “policy solution.”
“There will surely be some crisis,” Clark notes in his blog. “We must be ready to meet that moment both with policy ideas, and with a pre-existing transparency regime which has been built by listening and responding to people.”
In response to the post, U.S. AI and crypto czar David Sacks accused Anthropic of fearmongering.
Hoffman’s take, which he wrote about in his recent book, is by no means anti-regulation, but does differ somewhat from Clark’s. “In the book that I published in January, Superagency, part of what I was arguing for within AI is iterative deployment and development,” he tells Inc. “We do the regulatory thing, but we do it in response to what we can actually see versus imagination of what [could] happen,” he adds.
AI has never been more topical, especially among aspiring entrepreneurs. This week at Demo Day in San Francisco, founders from 20 different startups pitched more than 200 tech investors, among them big name firms like a16z, Khosla Ventures, Paladin Capital, Insight Partners and Engine Ventures, in hopes of landing as much as $7 million in seed funding. It represented the culmination of some six months of work the founders had put in during Entrepreneurs First’s incubator-style program. On the lips of most of those entrepreneurs was AI.
“The majority of the companies that were pitching yesterday—85 to 90 percent—are all using AI in some way. Some of them are building novel AI models, others are creating wrappers or scaffolding around existing AI models,” says Bentinck. “If you look at what early stage investors want to put capital behind, they see this enormous opportunity in the new AI economy.”
Originally founded in London, Entrepreneurs First started off as a nonprofit in 2011 before becoming the investment vehicle it is today, starting in 2015. The company expanded overseas to offer programming in San Francisco at the start of 2024, and continues to run cohorts across Europe, India and the U.S.
Entrepreneurs First functions something like an incubator, although Bentinck says EF thinks of itself more as a “talent investing studio.” It searches out individuals, usually with technical backgrounds, who also possess certain qualities related to pacing, productivity, determination, and even aggression, Bentinck says—qualities that alert EF that these individuals may outperform their peers. EF then guides them through the process of building a startup including helping them ideate if they don’t already have an idea and introducing them to potential co-founders.
“We find exceptional individuals, pre-team, pre-idea, pre-company. Really all that we’re looking for is their entrepreneurial potential and then we run them through a process that helps them build a startup from scratch,” Bentinck says.
The group that pitched this week included the top tier companies from EF’s European and U.S. programs. Each of these teams had been selected by EF and received $250,000 in pre-seed investment in exchange for 8 percent equity.
“That’s the culmination of EF and we then send them off into the wild to build enormous companies,” Bentinck says.
Peter Thiel, PayPal’s first CEO, turned his fintech fortune into a far-reaching empire of influence spanning venture capital, politics and power. Marco Bello/Getty Images
In 2007, Fortune magazine reimagined a classic mafia scene with a Silicon Valley twist: 13 male founders and early employees of PayPal, all long gone from the company, posed at a San Francisco café with slicked-back hair, poker chips and dozens of whiskey glasses. The crowd included some of the most recognizable names in today’s tech scene, like Elon Musk, Peter Thiel and Reid Hoffman. The magazine dubbed them the “PayPal mafia,” not for their time at the fintech company, but for their outsized impact on Silicon Valley through the companies they launched afterward.
PayPal went public in early 2002 and was acquired by eBay for $1.5 billion the same year. Most of its early employees left the company after the acquisition. They went on to found YouTube, SpaceX and LinkedIn, among other legendary names in Silicon Valley. However, like their cinematic namesake, the group hasn’t avoided controversy. These former colleagues have built billion-dollar businesses while also finding themselves in the crosshairs of public criticism.
For instance, Thiel has faced controversy over his political affiliations and, most notably, for funding Hulk Hogan’s 2012 lawsuit against Gawker Media with $10 million — a case that ultimately drove the online media company into bankruptcy. Musk has also faced criticism for his takeover of Twitter and his prior role in the Trump administration, where he led widespread federal employee firings.
Here’s what they are up to these days:
Peter Thiel: venture capitalist
Peter Thiel. Marco Bello/Getty Images
Peter Thiel, Max Levchin and Luke Nosek founded PayPal in 1998, originally as a software security company. After merging with Elon Musk’s X.com (unrelated to the social media platform he owns today), PayPal shifted its focus to digital payments.
Thiel served as CEO from 1998 until 2002, leaving after the company was sold to eBay. He then co-founded Palantir Technologies, a major U.S. government contractor providing data analytics services. The company now has a market capitalization of $439 billion.
Thiel is also known as a prolific angel investor. He co-founded Clarium Capital, Founders Fund, Valar Ventures and Mithril Capital. In 2004, Thiel became Facebook’s first outside investor after acquiring a 10.2 percent stake in the company for $500,000.
Thiel is among the many former PayPal employees who have entered political and high-profile public arenas. An active donor to the Republican Party, Thiel supported Donald Trump’s 2016 presidential campaign but withheld donations during the 2024 election. He is also credited with helping JD Vance reach the Vice Presidential ticket.
Elon Musk: entrepreneur, the world’s richest person
Elon Musk. Kevin Dietsch/Getty Images
Elon Musk briefly served as PayPal’s CEO before being ousted by the board in 2000. He went on to build one of the most influential portfolios in technology, spanning electric vehicles, space exploration, social media and A.I.
Musk founded SpaceX in 2002 and has led Tesla since 2008. He also founded Neuralink and The Boring Company, expanding his reach into brain-computer interfaces and infrastructure. In 2022, Musk gained global attention for acquiring Twitter for $44 billion, later rebranding it as X.
His ties to A.I. run deep: Musk co-founded OpenAI with Sam Altman in 2015 but left in 2018 over strategic disagreements. In 2023, he returned to the field by launching xAI, a research venture focused on building A.I. that is more understandable for humans.
Today, Musk is the richest person in the world, with an estimated net worth of $400 billion. He is also perhaps the only PayPal alumnus to ascend into direct political influence. During the Trump administration, he led the Department of Government Efficiency (DOGE)—a name shared with his cryptocurrency venture—before stepping down in May after clashing publicly with the President.
Max Levchin: computer scientist
Max Levchin. John Lamparski/Getty Images
Position at PayPal: co-founder, chief technology officer from 1998 to 2002
As PayPal’s chief technology officer, Max Levchin helped lead the company’s anti-fraud efforts by co-creating the Gausebeck-Levchin test—the foundation for the widely used CAPTCHA security tool. After leaving PayPal, he launched the media-sharing platform Slide in 2004, which was acquired by Google in 2010. Levchin briefly served as Google’s vice president of engineering until Slide was shut down the following year.
In 2012, he co-founded Affirm, a leading “buy now, pay later” (BNPL) company, where he continues to serve as CEO. Today, Affirm has a market capitalization of $27.5 billion, with 21.9 million consumers and more than 350,000 merchant partners on its platform.
Levchin has also held board positions at Yahoo and Yelp. In 2015, he became the first Silicon Valley executive appointed to the U.S. Consumer Financial Protection Bureau’s advisory board, emphasizing the importance of collaboration between companies and regulators.
Reid Hoffman: entrepreneur, investor
Reid Hoffman. Kimberly White/Getty Images for WIRED
Before joining PayPal, Hoffman worked as a senior user experience architect at Apple, contributing to the company’s online social network eWorld. He later became director of product management at Fujitsu. After his online dating startup, SocialNet, folded, Hoffman joined PayPal in 2000 as chief operating officer.
In 2003, he co-founded the career networking site LinkedIn. Following Microsoft’s $26.2 billion acquisition of LinkedIn in 2017, Hoffman joined Microsoft’s board, a move that greatly increased his wealth.
Over the years, Hoffman has served on the boards of Airbnb and OpenAI, where he was also an early investor. Through the venture capital firm Greylock Partners, he has backed dozens of A.I. startups. In 2022, he co-founded Inflection AI with Mustafa Suleyman, who now serves as CEO. Earlier this year, he teamed up with cancer researcher Siddhartha Mukherjee to launch Manas AI, a startup focused on drug discovery.
David Sacks: investor, White House A.I. and Crypto Czar
David Sacks currently serves as the White House A.I. and Crypto Czar. JC Olivera/Variety via Getty Images
Position at PayPal: chief operating officer from 1999 to 2002
Since leaving PayPal, David Sacks has built a career spanning film, tech, investing and politics. In 2005, he produced and financed a political satire that earned two Golden Globe nominations. The following year, he founded Geni.com, a genealogy-focused social network that later spun off Yammer, one of the earliest enterprise social networking platforms. He went on to co-found Craft Ventures, the startup Glue, and the podcast platform Callin.
Jeremy Stoppelman joined Musk’s X.com in 1999 and became vice president of engineering after its transition to PayPal. In 2004, he co-founded Yelp, where he has served as CEO ever since. Under his leadership, the company turned down a 2010 acquisition offer from Google and went public two years later. Stoppelman’s net worth is estimated at more than $100 million.
Ken Howery: investor, U.S. ambassador
Position at PayPal: chief financial officer from 1998 to 2002
Ken Howery served as PayPal’s chief financial officer from 1998 to 2002. After PayPal’s sale to eBay, he became eBay’s director of corporate development until 2003. He later joined Peter Thiel at Clarium Capital as vice president of private equity and went on to co-found Founders Fund as a partner. Beyond investing, he is a member of the Explorers Club, a nonprofit dedicated to scientific exploration, and an advisor to Kiva, the micro-lending nonprofit founded by former PayPal colleague Premal Shah.
Howery is also among the former PayPal executives who have moved into politics. He has donated at least $1 million to Donald Trump’s campaign through Elon Musk’s political action committee. During Trump’s first term, Howery was appointed U.S. ambassador to Sweden and today serves as the U.S. ambassador to Denmark.
Roeloth Botha: venture capitalist
Roelof Botha joined PayPal as director of corporate development shortly before graduating from Stanford University. He later became vice president of finance and went on to serve as chief financial officer until the company’s acquisition by eBay.
Position at PayPal: software architect from 1998 to 2003
Companies later founded: Yelp, Learnirvana
Russel Simmons helped design PayPal’s payment system as a software architect. After leaving the company, he and fellow PayPal alum Jeremy Stoppelman set out to build a platform for restaurant reviews. With a $1 million investment from Max Levchin, they launched Yelp in July 2004. Simmons served as chief technology officer until his departure in 2010. At the time, Yelp said he would remain a “significant” shareholder, though the size of his stake—and whether he still holds it—remains unclear.
In 2014, Simmons co-founded Learnirvana, an online learning platform.
Andrew McCormack: entrepreneur
Position at PayPal: assistant to Thiel from July 2001 to November 2002
Companies later founded: Valar Ventures
Andrew McCormack began his career as an assistant to Peter Thiel at PayPal and followed him into subsequent ventures. From November 2002 to April 2003, he oversaw operations at Thiel’s hedge fund, Clarium Capital.
In 2010, McCormack co-founded Valar Ventures with Thiel and James Fitzgerald, focusing on fintech investments. He remains a general partner at the firm.
Luke Nosek: investor
Position at PayPal: co-founder and vice president of marketing and strategy from 1998 to 2002
Companies later founded: Founders Fund, Gigafund
In 2005, Luke Nosek joined Peter Thiel and Ken Howery to launch Founders Fund, a San Francisco–based venture capital firm that has backed companies such as Airbnb, Lyft and SpaceX. While his exact net worth is unclear, Nosek has made substantial investments through his venture firms. At Founders Fund, he led one of the firm’s earliest major deals with a $20 million investment in SpaceX, later serving on its board.
In 2017, Nosek left to co-found Gigafund, which went on to invest $1 billion in SpaceX, according to the company. He also sits on the board of ResearchGate.
Premal Shah: entrepreneur
Position at Paypal: product manager
Companies later founded: Kiva
Three years after leaving PayPal, Premal Shah co-founded Kiva, a nonprofit that provides loans to entrepreneurs in underserved communities worldwide. He also serves on the boards of other nonprofits, including the Center for Humane Technology, the Change.org Foundation, Watsi and VolunteerMatch.
Keith Rabois: investor
Position at PayPal: executive vice president of business development
After leaving his executive role at PayPal, Keith Rabois became an active investor, backing companies including Slide, YouTube and Palantir. He also invested in LinkedIn, where he served as vice president of business and corporate development, and Square, where he was chief operating officer.
Rabois joined venture capital firm Khosla Ventures from 2013 to 2019 and was a partner at Founders Fund from 2019 to 2024.
Senator Elizabeth Warren (D-MA) and Representative Melanie Stansbury (D-N.M.) are leading a group of congressional Democrats in investigating White House Special Advisor David Sacks for possibly serving in his position for longer than he’s allowed. Sacks, a former PayPal executive and venture capitalist at Craft Ventures, was originally picked by President Donald Trump to be the “White House A.I. & Crypto Czar” in 2024.
“Any effort to stay beyond the time limits imposed on you as a Special Government Employee (SGE) would raise additional ethics concerns for you and the Trump Administration,” the group writes in a letter to Sacks,”particularly as it moves to implement recently enacted cryptocurrency legislation and put in place new rules for the crypto industry.”
Besides being friendly with the Trump campaign and allies like Elon Musk, Sacks was given his position because of his knowledge of the crypto and AI industries as an investor. That poses an obvious conflict of interest, something that’s only waived during the 130-day limit that SGEs are supposed to serve. As Warren and the other Democrats backing the investigation note, though, it’s possible Sacks has been working in his role for longer than that.
“If you have worked every calendar day since the presidential inauguration, your 130th day of work in this role was May 29, 2025,” the group writes. “If you have worked every business day, your 130th day was July 25, 2025. As of the date of this letter, it is the 167th business day of this Administration.”
As part of the investigation, Sacks is expected to offer a more detailed account of when and how he works in his advisory role, including if he answers government emails while working in Silicon Valley. Congressional Democrats are trying to verify if norms have been violated to make sure that they won’t be violated in the future, but there are larger ethical concerns to contend with, too.
The second Trump administration has been friendly to the crypto industry, likely thanks in part to the influence of Sacks. Trump signed an executive order calling for the creation of a federal Bitcoin stockpile and signed the GENIUS Act into law in July, establishing a regulatory framework for stablecoins, a type of cryptocurrency typically tied to the value of the US dollar. Continuing to serve in his role without leaving his position at Craft Ventures or disclosing his investments would only raise more questions about how Sacks stands to benefit from advising on regulation.
Mustafa Suleyman joined Microsoft last year to head up its consumer A.I. efforts. Stephen Brashear/Getty Images
Will A.I. systems ever achieve human-like “consciousness?” Given the field’s rapid pace, the answer is likely yes, according to Microsoft AI CEO Mustafa Suleyman. In a new essay published yesterday (Aug. 19), he described the emergence of “seemingly conscious A.I.” (SCAI) as a development with serious societal risks. “Simply put, my central worry is that many people will start to believe in the illusion of A.I.s as conscious entities so strongly that they’ll soon advocate for A.I. rights, model welfare and even A.I. citizenship,” he wrote. “This development will be a dangerous turn in A.I. progress and deserves our immediate attention.”
Suleyman is particularly concerned about the prevalence of A.I.’s “psychosis risk,” an issue that’s picked up steam across Silicon Valley in recent months as users reportedly lose touch with reality after interacting with generative A.I. tools. “I don’t think this will be limited to those who are already at risk of mental health issues,” Suleyman said, noting that “some people reportedly believe their A.I. is God, or a fictional character, or fall in love with it to the point of absolute distraction.”
OpenAI CEO Sam Altman has expressed similar worries about users forming strong emotional bonds with A.I. After OpenAI temporarily cut off access to its GPT-4o model earlier this month to make way for GPT-5, users voiced widespread disappointment over the loss of the predecessor’s conversational and effusive personality.
Debates will only grow more complex as A.I.’s capabilities advance, according to Suleyman, who oversees Microsoft’s consumer A.I. products like Copilot. Suleyman co-founded DeepMind in 2010 and later launched Inflection AI, a startup largely absorbed by Microsoft last year.
Building an SCAI will likely become a reality in the coming years. To achieve the illusion of a human-like consciousness, A.I. systems will need language fluency, empathetic personalities, long and accurate memories, autonomy and goal-planning abilities—qualities already possible with large language models (LLMs) or soon to be.
While some users may treat SCAI as a phone extension or pet, others “will come to believe it is a fully emerged entity, a conscious being deserving of real moral consideration in society,” said Suleyman. He added that “there will come a time when those people will argue that it deserves protection under law as a pressing moral matter.”
Some in the A.I. field are already exploring “model welfare,” a concept aimed at extending moral consideration to A.I. systems. Anthropic launched a research program in April to investigate model welfare and interventions. Earlier this month, the startup its Claude Opus 4 and 4.1 models the ability to end harmful or abusive user interactions after observing “a pattern of apparent distress” in the systems during certain conversations.
Encouraging principles like model welfare “is both premature, and frankly dangerous,” according to Suleyman. “All of this will exacerbate delusions, create yet more dependence-related problems, prey on our psychological vulnerabilities, increase new dimensions of polarization, complicate existing struggles for rights, and create a huge new category error for society.”
To prevent SCAIs from becoming commonplace, A.I. developers should avoid promoting the idea of conscious A.I.s and instead design models that minimize signs of consciousness or human empathy triggers. “We should build A.I. for people; not to be a person,” said Suleyman.
