OpenAI’s nightmare: What David Sacks as AI Czar (and Elon Musk as wingman) could mean for Sam Altman’s $157 billion startup

The Musk-Sacks duo have been publicly critical of OpenAI, and there’s a fair amount of contentious history among the Silicon Valley entrepreneurs.

Musk, of course, famously co-founded OpenAI with Altman nine years ago but left after a power struggle and has since launched rival company xAI. (Musk has also filed multiple lawsuits against OpenAI, including the latest which seeks to stop OpenAI from transitioning from a “capped-profit” company into a fully for-profit enterprise). 

Sacks’ VC firm Craft Ventures has invested an undisclosed amount of money in Musk’s xAI. And Sacks has not been shy in expressing his disdain for some of OpenAI’s recent moves, saying on his All-In podcast last month that OpenAI has “gone from nonprofit philanthropy to piranha for-profit company.” 

A one-two punch to OpenAI?

What could a Musk-Sacks one-two punch do to harm a competitor like OpenAI?

In theory, as Fortune reported earlier this week, Trump’s new billionaire advisors could use their positions and influence to steer government AI contracts to their own companies, and to push the government to crack down on competitors like OpenAI. In addition to wearing the AI and crypto czar’s imperial crown, Sacks will lead the President’s Council of Advisors on Science and Technology (PCAST), which makes science, technology, and innovation policy recommendations to the President and the White House.

Musk, meanwhile, could use his new DOGE role to eliminate governmental hurdles facing xAI or artificial intelligence more broadly, said Richard Schoenstein, vice chair of litigation practice at law firm Tarter Krinsky & Drogin, who called Musk’s dual role as businessman and Trump advisor a “dangerous combination.”

It’s no wonder Altman is trying to make nice. At the New York Times’ DealBook summit this week, Altman said he was “tremendously sad” about tensions with Musk, and dismissed the idea that Musk could use political power to hurt competitors and advantage his own businesses. “It would be profoundly un-American,” he said. 

And when Trump anointed Sacks as AI czar on Thursday evening, Altman quickly posted a congratulatory message on X.

If the intent was to make a public gesture of goodwill however, it had the opposite effect, and only further confirmed Altman’s predicament: Musk responded to Altman’s tweet with a laughing emoji.

A delicate moment for OpenAI

All of this comes at a delicate moment for OpenAI. The $157 billion-valued startup is not only working on a plan to restructure into a for-profit benefit corporation that is not controlled by a non-profit board, but is also reportedly hoping for more investment by removing the infamous ‘AGI’ clause with Microsoft, which is OpenAI’s largest shareholder thanks to a $13 billion investment. The AGI clause was implemented to keep powerful artificial general intelligence from being exploited by commercial interests and OpenAI’s nonprofit board exclusively determines when AGI is achieved. By removing the clause and transitioning OpenAI to a for-profit, Altman could be in a position to gain significant equity in the company, something investors are “pushing hard” for, a source familiar with the situation told Fortune recently. 

The technical challenges that must still be overcome to achieve AGI are immense. But as OpenAI pushes ahead on its mission, the role of government regulation will become increasingly important. And on that front, Sacks and Musk have each made nuanced comments that make it difficult to predict what kind of policies they might push for in the Trump administration.

Sacks, for example, reportedly deleted past tweets in which he said that while he was in favor of accelerating technological progress he found “something unsettling” about OpenAI’s declared mission to create AGI. “I doubt OpenAI would be subject to so many attacks from the safety movement if it wasn’t constantly declaring its outright intention to create AGI. To the extent the mission produces extra motivation for the team to ship good products, it’s a positive. To the extent it might actually succeed, it’s a reason for concern,” Sacks apparently tweeted.

Musk, for his part, has frequently voiced concerns about AGI falling into the wrong hands and, earlier this year, predicted that AI could surpass human intelligence by the end of 2025. In March 2023, he signed an open letter calling for a six-month pause on developing AI systems more powerful than GPT-4, warning of “profound risks to society and humanity.” Scientist Max Tegmark, who authored the letter for his nonprofit Future of Life Institute, recently praised Musk’s potential influence on Trump, suggesting it might lead to stronger AI safety standards. These positions could bolster the argument that Musk might take steps to slow OpenAI’s path to AGI, particularly since Musk also supported the failed California SB-1047 bill, which was meant to regulate the development and use of the largest and most powerful AI models.

That said, Altman might yet benefit from Sacks’ views on accelerating AI development and loosening restrictions.

Many have predicted, for example, that Trump will do away with President Biden’s October 2023 AI Executive Order. And if Sacks’ own X posts are any indication, the EO’s days could be numbered. When the executive order was announced, Sacks tweeted that “the U.S. political and fiscal situation is hopelessly broken, but we have one unparalleled asset as a country: cutting-edge innovation in AI driven by a completely free and unregulated market for software development.”

With the Biden AI order, Sacks continued, “that just ended.”