Is State Capitalism Coming to AI?
The news site NOTUS reports on discussions about the U.S. federal government taking partial ownership in American AI companies:
Senior U.S. officials have held preliminary discussions with major artificial intelligence companies about the potential for the federal government to acquire some shares in their firms, according to three people familiar with the matter.
Sam Altman, the CEO of OpenAI, has discussed the idea with senior Trump administration officials periodically since the president began his second term, said two of the sources, all of whom spoke on the condition of anonymity to reflect private deliberations. Altman first pitched the concept directly to President Donald Trump in a conversation in early 2025, and has discussed it again with senior administration officials in recent weeks as a way to more broadly distribute the economic benefits of AI to the public, they said.
While planning is ongoing and details are in flux, discussions have centered on having the firms voluntarily cede the shares to the government, the people said. The returns on the investment could then be directed to public purposes, one of the people said, such as distributing a dividend payment to all American households.
In comments he made on Friday, Trump seemed open to this idea.
If this actually happens, it will be interesting to see what the final arrangement looks like, but regardless I think this policy is likely to generate the following international response: Foreign governments could decide to pour resources into developing their own domestic AI sector. There are a couple reasons for this.
First, if a person's use of services from OpenAI and other American AI companies means that money gets sent to Americans but not to non-Americans, non-Americans are going to have a disincentive to use the service. Such a financial outcome would feel totally unfair to non-American users, and they are likely to seek out alternative services.
Second, there will be added privacy concerns with the U.S. government being involved in these companies. There is already a good deal of distrust about the U.S. government getting access to data held by U.S. tech companies. U.S. government ownership of shares in these companies makes this an even bigger concern.
It seems to me, then, that in response to demands from their citizens (and nascent industries), many foreign governments are almost certain to move in the direction of developing their own AI industries to compete with American government-owned AI companies, kicking off an industrial policy competition in this sector.
How difficult will it be for a foreign government to do this successfully? That's hard to say. Building an industry that is as good as the American one could be tough. The American industry has both a head start and greater resources. On the other hand, it's much easier to follow than to lead, so I think a fair number of other countries could develop a sector that offers a pretty good service, even if not quite at the American level at first.
And if they follow the U.S. model that is being suggested, it will be easy to market the product domestically by telling people there is money in it for them if they use the domestic service, and also that by using the domestic service they can help it improve and catch up to the Americans.
At this point, let me just add a general comment that will not come as a surprise to this blog's readers: In my view, state capitalism of this sort would be a terrible policy for the U.S. government (and every other government) to adopt, and everyone should turn away from this approach immediately. It will lead to worse services, worse business practices, and worse government policies in this sector, and should be avoided. Whatever your views on AI in general (I'm more on the skeptic side, as I think of AI as probably useful for some things but a bit overhyped*), I don't think government ownership of this industry is the right road to go down. What we want instead is a competitive industry that gives companies an incentive to behave better, and is subject to regulation that will prevent the range of abuses and harms that have been widely reported and should be taken more seriously.
Finally, let me note that if the real reason for U.S. government ownership here is that the AI sector has no path to profitability and the government is effectively being asked to "socialize the losses," this whole thing makes even less sense.
* The caveat to this is that I don't use AI at all (except for when a Google search forces it on me), so it's possible I don't know what I'm talking about! But I've read enough about how it works, and also I ran this by some people who are actual users/experts, so I feel confident enough to post this. Feel free to tell me in the comments how I'm getting it all wrong though!