This isn’t just another tale of Washington’s revolving door. This is about the very architecture of our digital future being designed by people with a direct, billion-dollar stake in the outcome. It forces us to ask some deeply uncomfortable questions about ethics in AI governance and whether concepts like investment transparency are even possible when the stakes are this high.
The Ethics Waiver: A Licence to Do What, Exactly?
In the peculiar world of government appointments, there exists a document known as an “ethics waiver.” In theory, it’s a tool to allow talented individuals from the private sector to serve the public without being hamstrung by minor, unavoidable conflicts. In practice, as we’re seeing with Sacks, it can look a lot more like a get-out-of-jail-free card.
According to government ethics expert Kathleen Clark, who spoke to NPR, “These are sham ethics waivers.” She argues they essentially tell an official, “Go ahead and take action that would ordinarily violate the criminal conflict of interest statute, we won’t prosecute you for it.” It’s an extraordinary arrangement. Imagine a property developer being asked to rewrite a city’s planning laws whilst still owning half the undeveloped land. You wouldn’t need a crystal ball to predict whose interests would be prioritised.
For Sacks, this waiver allows him to keep his fingers in over 400 tech-related pies—many with significant AI interests—whilst simultaneously shaping the very federal policies that will determine which of those pies grow and which get left on the windowsill. It’s a situation that stretches the definition of public service to its breaking point.
Sacks and the Silicon Valley Playbook
To understand David Sacks is to understand a certain breed of Silicon Valley royalty. A member of the so-called “PayPal Mafia” alongside figures like Elon Musk and Peter Thiel, his career has been a masterclass in placing strategic bets. Through his firm, Craft Ventures, he has backed a legion of tech companies. Whilst he claims to have divested “hundreds of millions of dollars in positions… at a substantial cost to my net worth,” the sheer number of a reported 400 remaining investments raises serious questions.
The core of the issue is a recent executive order he championed, one that directs the Justice Department to challenge state-level AI regulations. This is the classic Silicon Valley playbook. Why deal with a messy patchwork of 50 different rulebooks when you can lobby for one, friendly federal law that you helped write? Marc Andreessen, another venture capital titan, put it bluntly: “A 50-state patchwork is a startup killer.”
On the surface, this sounds reasonable. A unified market is more efficient. But the subtext is what matters. A single federal law is much easier to influence than 50 separate state legislatures. By pushing for federal pre-emption, the goal isn’t just to simplify government tech regulation; it’s to control it. It’s about ensuring the rules of the road are written by and for the likes of OpenAI, Google, Anthropic, and xAI—not by pesky state governments worried about jobs, safety, or bias.
Trouble in Paradise: When Your Cheerleaders Turn on You
Here’s where the story gets truly fascinating. The most pointed criticism of Sacks’s strategy isn’t coming from Democrats or government watchdogs alone. It’s coming from inside the house. Steve Bannon, a key architect of the MAGA movement, has been openly sceptical. “Where’s the risk mitigation?” he asked, questioning Sacks’s motives and floating the spectre of future bailouts.
This is a direct shot across the bow, and it touches on a very raw nerve: the 2023 collapse of Silicon Valley Bank. When SVB went under, the federal government stepped in to back a staggering $175 billion in uninsured deposits, effectively bailing out the tech industry’s favourite bank. The fear now, and Bannon is tapping right into it, is of a repeat performance. What happens when the AI investment bubble—and let’s be honest, it has all the hallmarks of a bubble—bursts? Who will be left holding the bag?
Sacks has taken to social media platform X to declare, “There will be no federal bailout for AI.” But public memory is short, and the political influence concerns are palpable. When the industry that wrote the rules finds itself in trouble, history suggests that taxpayers, not venture capitalists, are often the ones who pay the price. The push for federal control looks less like a move for efficiency and more like a move to ensure the federal government is on the hook when the bets go bad.
Can We Have Innovation Without a Rigged Game?
This entire saga exposes the fundamental tension at the heart of regulating new technology. We want innovation. We want our economies to benefit from the incredible advancements in AI. But we also need trust. Public trust is the currency upon which all technological adoption is ultimately built. And that trust is impossible to maintain when the game feels rigged.
Ensuring investment transparency is a critical first step, but it’s not enough. A waiver that acknowledges hundreds of conflicts of interest doesn’t solve the problem; it merely publicises it. What’s needed is a structural separation between those who stand to profit from a technology and those who write its rules. Anything less is simply a recipe for cronyism, where policy serves private portfolios instead of the public interest.
The debate over AI’s future is far from over. Will we learn the lessons from past tech booms and busts? Can we create a framework for government tech regulation that fosters growth whilst protecting the public? The Sacks conundrum suggests we have a very long way to go.
So, what do you think? Is it possible for someone with deep financial ties to an industry to regulate it impartially, or is this a fundamental AI policy conflict of interest that can’t be waived away? Let me know your thoughts in the comments below.
