Trump eyes government equity in AI firms, Bloomberg warns of cronyism
The White House is considering taking direct stakes in artificial intelligence companies, threatening to upend the industry's private-risk model and drawing fierce criticism from Michael Bloomberg.
The Trump administration is exploring plans to take a direct governmental stake in artificial intelligence companies, marking a profound shift in how Washington approaches the technology sector. The proposal has drawn swift pushback from billionaire Michael Bloomberg, who warned that state ownership would fundamentally corrupt the market.
The move signals the collapse of the unwritten bargain that has fueled the American AI boom to date. Under this original model, private investors absorbed the massive financial risks while companies retained the initial rewards of breakthroughs, later distributing them through public listings. Washington, meanwhile, confined its role to after-the-fact regulation.
Three factors are driving the White House to reconsider this hands-off approach: soaring development costs, rapid gains by Chinese competitors, and a growing consensus within Washington that AI is a vital national security asset. This contrasts with the Chinese model, where Beijing directly provides computing power to firms while they still compete for private capital and customers.
Despite the departure from traditional US market principles, the concept of state equity has garnered rare unified support from the populist left, the populist right, and the AI companies themselves. However, in a Monday opinion column, Bloomberg attacked the framework as a dangerous blurring of lines between regulator and investor.
He argued that giving the government a profit motive would inevitably lead to cronyism. “Somewhere, Karl Marx is smiling,” Bloomberg wrote of the centrally planned structure, adding that the resulting propaganda capabilities would “make George Orwell blush.” He predicted federal shareholders would ultimately degrade the market into a “smoke-filled backroom.”
For market professionals, the debate represents a potential structural shift in corporate governance and equity valuation. If the government becomes a major shareholder, private investors will have to weigh how federal involvement might distort capital allocation, M&A activity, and strategic decision-making within the sector.
Bloomberg countered that the public does not need state equity to capture AI’s economic upside. Citizens can buy shares when companies go public, while the broader economy already benefits from applied AI in fraud detection, bookkeeping, and medical research.
Instead of acquiring stock, he argued, the government should rely on the increased tax revenue generated by this economic growth. If AI firms are failing to contribute sufficiently to public services, Bloomberg concluded, Washington should fix the tax code rather than buy the companies.
