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Eric Schmidt, the multibillionaire Silicon Valley tech mogul, venture capitalist, philanthropist and former Google CEO, is now a public-facing Washington adviser whose actions and inactions are targeted for questions and critiques. The latest example is fallout from a Special Competitive Studies Project (SCSP) report published in September.
Back in March, when Politico reported that Schmidt Futures indirectly paid the salaries of more than a dozen White House Office of Science and Technology Policy (OSTP) staffers, the nonprofit justified the practice, noting in a blog post that OSTP “has been chronically underfunded, and for decades.”
“Founded by Eric and Wendy Schmidt, Schmidt Futures is a philanthropic initiative that brings talented people together in networks to prove out their ideas and solve hard problems in science and society,” according to the group’s web site.
Schmidt also founded the SCSP, a private nonprofit whose advisory board he chairs.
Since the SCSP’s Sept. 12 release of a chilling report about the U.S.-China chip war, the critiques have been coming: CNBC and Protocol published articles focused on Schmidt’s history of not disclosing personal investments that seemingly presents a conflict of interest with his government dealings, as well as on the SCSP report’s omission of his personal investments in AI companies.
Separately, EE Times found that the report also ignored Manufacturing USA, which has received billions of dollars in public-private investment aimed at the same U.S.-tech–superiority goals at issue in the SCSP report. One source called that a “glaring omission.”
No one has made ethics or legal charges against Schmidt.
Through his spokesperson, Tara Rigler, Schmidt declined to be interviewed for this article.
Sounding the digital alarm
The SCSP document echoes recent national political discourse on authoritarianism, and its message implies world domination overall by China or the U.S.—and especially in tech like artificial intelligence (AI), 5G and microelectronics.
Whoever prevails in the current tech war between the U.S. and China will determine if “we will live in a world shaped by free expression, tolerance, and self-determination, or dictated by censorship and coercion,” according to the introduction to “Mid-Decade Challenges to National Competitiveness.” The report is available on the SCSP website.
In response to questions related to Schmidt’s views on transparency and disclosure, and any plans to disclose his relevant investments in SCSP reports to come, Rigler said, “Each report is meticulously footnoted and sourced. SCSP will continue to release reports as it completes its research into the areas outlined in its September 2022 report.”
The document—which was released prior to the SCSP’s Global Emerging Technology Summit held on Sept. 16 and discussed there—posits that Washington has until 2030 to win its tech war with Beijing—or be outflanked by China’s control of highly advanced semiconductor tech.
The document calls for deeper public-private coordination to regain U.S. manufacturing leadership in digital technology, address workforce shortages and ensure supply chain resiliency. It also suggests U.S. government action and investment to:
- Safeguard open-source software,
- Create an accredited, degree-granting university to train government digital workers,
- Support technology for national intelligence decision-making,
- Attract and give preferential treatment to international tech talent,
- Impose stronger export controls and
- Conduct investment screening to protect American interests.
Two reports provide details
Since the release of the SCSP’s report, an Oct. 24 CNBC story quoted Walter Shaub, senior ethics fellow at the Project on Government Oversight and former director of the U.S. Office of Government Ethics, criticizing Schmidt for his lack of transparency over financial investments in AI companies during his previous leadership at the National Security Commission on AI (NSCAI), when he privately invested in a startup named Beacon.
The commission existed from 2018 to 2021 to advise the U.S. government. It also wrote legislation that was adopted and drove billions of dollars of taxpayer money to Schmidt’s industry, according to CNBC.
Schmidt’s venture capital firm, Innovation Endeavors, has invested in military AI software provider Rebellion Defense and chemicals and materials AI company Citrine Informatics, according to an Oct. 31 report by Protocol.
Other revelations in the Protocol article include:
Rigler declined to comment about the CNBC and Protocol reports.
The gold standard in government
While no one has made ethics or legal charges against Schmidt, his activities present possible conflicts of interest and highlight the clashes inherent in his public and private lives.
“It’s important for anyone who’s in a position, either working for government or advising government officials and agencies, to disclose where they have private interests, or financial interests—present or future—related to the recommendations that they are making,” John Pelissero, senior scholar in government ethics at the Markkula Center for Applied Ethics at Santa Clara University, told EE Times.
“Typically, in government, we expect our public officials and those that they employ or contract with to always put the public interest first, and it’s therefore important that those that are in a position to influence public policy are demonstrating, through their behavior and actions, that the public interest is first and foremost in their minds,” he said.
Best practices include upfront disclosure to avoid even a whiff of conflict of interest, said Pelissero, who holds a doctoral degree in political science. Actions in Washington are further governed by the Office of Government Ethics, inspectors general at federal agencies and campaign finance law, he said.
Schmidt’s investment activities are not related to SCSP or NSCAI, Rigler told EE Times.
“He followed all the rules,” she added in a follow-up call.
“People close to Schmidt” said his investments were disclosed privately to the government while he was on the NSCAI, according to CNBC’s report. But that disclosure is not public.
Where’s Manufacturing USA?
On top of the previously reported omission of Schmidt’s relevant investments, the SCSP report also skipped mention of Manufacturing USA, the 10-year-old entity the Obama Administration established. That is striking because the objectives and activities of the network of regional institutes significantly overlap with the report’s recommendations—and represent billions of dollars in taxpayer and private funding.
The overlap includes:
- Federal and private funding to drive tech innovation,
- Public-private partnerships,
- Attracting and training youth for digital jobs,
- TRL and MRL (technology and manufacturing readiness levels) advances in high tech, and
- Deploying advanced technology for military readiness and national security.
For all the expertise and effort that led to the 188-page SCSP report—four board meetings, 26 panel meetings with 225 experts and 400 “engagements with private sector, academic, civil society, and government leaders” over 10 months, according to the document—is it possible there was also some unnecessary wheel re-inventing?
“Unfortunately, neither our director, Mike Molnar, nor our deputy, Frank Gayle, was involved with this effort,” said Zara Brunner, communications director for the National Institute of Standards and Technology (NIST), whose Advanced Manufacturing National Program Office oversees Manufacturing USA.
Brunner called it a “glaring omission.”
After EE Times pointed out the oversight, Rigler said via email that SCSP staff have attended an annual summit for one of Manufacturing USA’s institutes, Advanced Functional Fabrics of America (AFFOA), and SCSP “intends to engage with government-sponsored manufacturing programs such as Manufacturing USA as part of its 2023 research.”
“Advanced manufacturing is one of SCSP’s key research topics for 2023,” she said.
Innovation institutes do AI, too
Because increasing amounts of hardware are driven by software, Manufacturing USA has digital chops, too. Among the AI-related achievements that emanated from the ARM Institute, AFFOA, NextFlex, and MxD, respectively, are:
- Automated clothing construction by robots that grasp and place fabric and partially completed garments,
- Multiplexed sensing devices created by embedding semiconductor chips into drawn polymer fiber, also known as “any chip anywhere,” for data telemetry, power and computation,
- Smart mouth guards that detect the threat of physical exhaustion and dehydration in athletes and soldiers at war, and
- Cyber Platform, a process manufacturing system outfitted with 20 sensors that measure temperature, flow rate, pressure, tank levels and liquid color. When combined with Industry 4.0 analytics, such as machine learning, these data points can provide anomaly detection that allows manufacturers to efficiently respond to and recover from cyberattacks.
$3.6 billion invested in 10 years
Washington, D.C., individual states and commercial entities have invested big in Manufacturing USA to advance America’s industrial prowess in all things digital.
“Total initial federal funding for these institutes was approximately $1.2 billion, with an additional $2.4 billion provided in matching funds by the non-federal institute partners, for a total of $3.6 billion,” according to a Congressional Research Service assessment issued in October. This starter funding was for five to seven years, varying by institute. Some have since received additional federal funding, although the long-term objective is for the institutes to become self-supporting.
NIST said funding-to-date information is not readily available. However, in FY2021 alone, the institutes attracted $354 million from state, federal/pandemic, and private funds, in addition to $127 million in base federal funding.
Report’s findings on target
Whether or not the criticism of Schmidt and the SCSP is on target, the group’s recommendations back up a commonly held viewpoint: Washington and Beijing are competing for digital domination.
As a result, the Biden Administration has intensified a tech war with China that started in the previous administration.
Under the U.S. CHIPS and Science Act, enacted earlier this year, semiconductor companies including Samsung, SK Hynix, Intel and Taiwan Semiconductor Manufacturing Co. are expected to face restrictions on upgrades to existing manufacturing operations in China. More recently, new restrictions from the U.S. Department of Commerce on global exports of advanced chip-making tech are expected to impair Chinese chip designers like Alibaba and Baidu.
In addition, the U.S. is trying to strengthen pipelines in the semiconductor industry and curtail China’s chip-making power through the U.S.-East Asia Semiconductor Supply Chain Resiliency Working Group, known colloquially as the Chip 4 Alliance. Along with the U.S., the group’s talks have included Japan and Taiwan. While South Korea has joined in talks, indications that the country will join the group have been mixed.