Google's former CEO leveraging his $27 billion fortune to shape AI policy
Eric Schmidt isn’t shy about his wealth and power: The former Google CEO recently bought a superyacht seized from a Russian oligarch, he owns a big stake in a secretive and successful hedge fund, and he spent $15 million for the Manhattan penthouse featured in Oliver Stone’s sequel to "Wall Street."
He has also leveraged his $27 billion fortune to build a powerful influence machine in Washington that’s allowed him to shape public policy to reflect his worldview and benefit the industries in which he’s deeply invested — most recently, artificial intelligence. When senators meet next week to hear from tech executives and experts about how AI should be regulated, Schmidt will be at the table.
In his previous comments to Congress on AI, Schmidt has delivered a relatively simple message: The U.S. needs to keep both public and private money flowing to innovative companies to counter China’s technological advancements. Behind his testimony, he has complex layers of connections to drive that message home.
There’s the Special Competitive Studies Project, a private think tank he founded in 2021 and funded with an initial $2 billion. Located roughly a mile from the Pentagon and modeled on a Cold War-era initiative, SCSP focuses on how AI and other emerging technologies could upend the U.S. economy and national security. It has sent experts this year to testify before the Senate Judiciary Committee and advise the House committee studying the U.S.’ “strategic competition” with China. At the think tank’s emerging-technology summit later this month, Schmidt and his associates will once again share the stage with senior Biden administration officials.
Then there’s Schmidt Futures, his initiative to support scientists and entrepreneurs, some of whom have gone on to work for governments around the world. Politico reported last year that Schmidt Futures indirectly paid the salaries of some White House science office employees.
And Schmidt himself has been on high-profile advisory committees under the past three presidential administrations, including the National Security Commission on AI — mandated by Congress — which he led from 2019 to 2021.
“For decades there’s been a hollowing out of the federal government’s expertise and capacity, and that hollowing out has helped create an opportunity for Schmidt — who would always be an influential person under any scenario — to be just mind-blowingly influential,” said Jeff Hauser, head of the Revolving Door Project, a nonprofit that scrutinizes government appointees. “He just has the capacity to generate almost every mouth that is in the ears of policymakers in Washington.”
And they appear to be listening.
“I’ve always found Eric Schmidt to be a helpful resource,” Senate Majority Leader Chuck Schumer said in an emailed response to questions about the former Google CEO. “I know many senators on both sides of the aisle feel the same way. He is smart, thoughtful and pragmatic.”
When Schmidt testified before the House China Committee in May, he said the U.S. “must organize around innovation power.” The next month, Schumer said “innovation must be our North Star” when introducing his AI framework and the roundtable of tech leaders he’ll host next week.
All this is happening at a key moment for U.S. AI policy, as the government races to set the global standard for regulating the new technology. Schumer said he aims to turn next week’s “insight forum” — including Schmidt, civil society leaders and executives from Google, Microsoft Corp., OpenAI and other top tech companies — into legislation in a matter of months, not years.
“Eric has been grateful for the opportunity to volunteer his time serving on various U.S. government committees under both Democratic and Republican administrations and has always fully complied with all disclosure requirements,” a spokesperson for Schmidt said in an emailed statement.
Schmidt, who took over as Google CEO from founders Sergey Brin and Larry Page in 2001 to help the company grow and go public, has already profited handsomely from Wall Street’s newfound obsession with AI. The bulk of Schmidt’s wealth comes from his roughly 1% stake in Google parent Alphabet Inc., one of a handful of companies that have been the key drivers and beneficiaries of AI advancements in the U.S. He also owns 20% of the hedge fund D.E. Shaw & Co., which manages $60 billion and is a prominent investor in technology and AI.
Alphabet’s share price is up 53% this year, helping add $7.8 billion to Schmidt’s net worth, according to the Bloomberg Billionaires Index. He’s collected about $4 billion from the sale of Alphabet stock over the years, actions that have helped fund his investments in AI startups, including some that have gone on to win federal contracts.
Government watchdogs and outside groups have long raised questions about Schmidt’s potential conflicts of interest. Sen. Elizabeth Warren, a Massachusetts Democrat, last year wrote to the Pentagon laying out her concerns that Schmidt could use his position on federal commissions to “further his own personal financial interests.”
Schmidt has been remarkably candid about how his connections from the National Security Commission on AI and his other initiatives expand his reach — a strategy honed from his time at Google, which has developed a reputation as a lobbying powerhouse that aggressively advocates for its interests in Washington.
“The people who work in the commission and then go into the government, they are your emissaries,” Schmidt told a Capitol Hill cyber-policy event in June. “A rule of business is that if you could put your person in the company, they’re likely to buy from you. It’s the same principle.”
At the same Capitol Hill event, Schmidt pointed to how much of the AI commission’s final report was incorporated into the National Defense Authorization Act, one of the bipartisan spending bills Congress passes annually.
“This is pretty arrogant on our part, but we figured, since they’ve asked us to work, we might as well produce some legislation candidates," Schmidt said. "And much of that, something like two-thirds of it, is now part of the NDAA."
According to a June report from the conservative nonprofit Bull Moose Project, Schmidt’s own venture capital funds and others in which he owns a stake invested in at least 57 AI startups, seven of which won government contracts or other forms of support. These investments, which were verified by Bloomberg News, include Rebellion Defense, a warfighting software company that counts Schmidt-backed venture firm Innovation Endeavors among its investors and won an Energy Department contract in April to enhance cybersecurity for the U.S. nuclear arsenal.
Innovation Endeavors also invested in Machina Labs, an AI and robotics manufacturing company that has won $4.8 million in contracts from the Defense Department and NASA since 2021, according to government spending data cited by Bull Moose, including a $3 million contract for aerospace components.
The Tech Transparency Project, a nonprofit, also documented how Schmidt helped craft the 2022 CHIPS and Science Act, which injected more than $50 billion into U.S. manufacturing of semiconductors, an essential ingredient in AI development. Several of his initiatives, including the public-private America’s Frontier Fund, are poised to benefit from the legislation, according to the nonprofit’s July report.
Schmidt’s financial interest in AI isn’t limited to U.S. firms. Even as he warns policymakers about the competitive threat from China, his philanthropic Schmidt Family Foundation had invested in some of China’s biggest tech companies developing AI tools.
Managed by Hillspire LLC, Schmidt’s family office, the foundation held $1.7 million in Tencent Holdings Ltd. and $1 million in Alibaba Group Holding Ltd., according to tax documents filed last year. It also had smaller investments in more than 40 other Chinese companies, including state-owned enterprises like the Bank of China. These investments made up a small portion of the foundation’s $2.3 billion in total assets.
A Schmidt spokesperson said the investments were made by a third-party manager, and neither Schmidt nor the foundation made any decisions, suggestions or recommendations. The spokesperson didn’t respond to a question regarding the current size of the foundation’s stake in the Chinese companies.
AI isn’t the only emerging technology to be shaped by Schmidt and his network. In April 2022, a Schmidt Futures task force published a report on how the U.S. should develop biotechnology. Several months later, the White House issued an executive order that echoed many of its recommendations, including proposals for federal investment and data sharing.
At a synthetic-biology conference last year, he advised attendees on how to win the U.S. government’s attention and money.
“What I found with politicians — because I spend an infinite amount of time in Washington, it seems, and have for decades — is some people respond to the threat from another country” like China, Schmidt said, while others respond to the promise of solving issues like climate change. The trick, he said, is to “figure out what they care about and offer our solution to their problems.”