Sen. Warren presses Defense Secretary about ex-Google CEO Schmidt's potential conflicts when he advised Pentagon on AI

Story by Eamon Javers • CNBC

Sen. Elizabeth Warren pressed Defense Secretary Lloyd Austin about former Google CEO Eric Schmidt's involvement in influential panels that helped shape policy in an industry where he was investing.

Warren, in a letter shared first with CNBC, expressed concerns about reports alleging Schmidt leveraged his positions on two federal advisory committees "to further his own personal financial interests."

Warren asked Austin to detail the Pentagon's conflict-of-interest policy for advisory board members and answer multiple questions about Schmidt's service on the panels.


Eric Schmidt, Co-Founder, Schmidt Futures, speaks during the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.© Provided by CNBC

Sen. Elizabeth Warren on Tuesday pressed Defense Secretary Lloyd Austin about his agency's enforcement of conflict-of-interest rules for federal advisory boards, zeroing in on former Google CEO Eric Schmidt after CNBC reported on his past involvement on influential panels in an industry where he was an investor.

"Federal advisory boards can provide valuable advice and insights to federal agencies, but without strong oversight and clear guardrails they can also provide their board members an unfair competitive advantage in winning government contracts and influencing agency policy," Warren wrote in a letter to the DOD head.

Warren said she was concerned about reports alleging Schmidt leveraged his positions on two federal advisory committees "to further his own personal financial interests." Those reports could suggest the Defense Department did not adequately apply federal conflict of interest rules "and therefore failed to protect the public interest" in Schmidt's case, wrote the Massachusetts Democrat.

Warren, who sits on the Senate Armed Services Committee and leads congressional subcommittees on economic policy and fiscal responsibility, asked Austin to detail the Pentagon's conflict-of-interest policy for advisory board members and answer multiple questions about Schmidt's service on the panels.

Schmidt made more than 50 direct personal or indirect corporate investments in AI companies while he was serving as the chairman of the National Security Commission on Artificial Intelligence, or NSCAI, she said, citing a CNBC article from October. The group, established in 2018, advised the Pentagon and White House on AI policy — even crafting legislative language that later passed word for word — and helped steer billions of dollars in spending toward the AI industry. The group wound down in 2021.

Walter Shaub, a senior ethics fellow at the Project on Government Oversight, told CNBC at the time that Schmidt's investments "absolutely" posed a conflict of interest. There was no indication that Schmidt broke any ethics rules or did anything unlawful while chairing the commission.

Warren's letter referenced Schmidt's work on the NSCAI and the Defense Innovation Board. Both advisory boards are subject to conflict-of-interest rules under the Federal Advisory Committee Act.

"These boards can exert significant influence in shaping government research and procurement priorities, making it essential that agencies prevent and mitigate conflicts of interest," the senator wrote. "I am concerned by press reports indicating the Department may not have adequately followed FACA conflict of interest rules and therefore failed to protect the public interest."

The NSCAI under Schmidt advocated for a major boost in government spending on AI. "But Mr. Schmidt has a clear conflict of interest in this issue: the NSCAI recommendations could direct funds to Mr. Schmidt and his business partners, who have invested more than $2 billion in companies focused on artificial intelligence," Warren wrote, citing reporting from Protocol.

"Mr. Schmidt's investment activities, and the lack of public disclosure, create the appearance that these boards are yet another tool for influence-peddling and profiteering at DoD, raising concerns about the ethics of their members and the utility of their recommendations," Warren wrote.

AFTER SCHMIDT ADVISED NKOREA