AI Czar Questions OpenAI’s Prospects for a Bailout

Is it a good sign or a bad sign that the biggest player in an emerging industry actively making trillion-dollar commitments that are artificially propping up the economy is asking for government support, and representatives of the government are weighing in on it? Asking for a friend.

Yesterday, OpenAI’s CFO Sarah Friar made headlines when she said during an appearance on the Wall Street Journal’s Tech Live event that she expects the federal government will provide a “backstop” to guarantee the company will be able to finance its massive and rapidly expanding infrastructure of data centers. The same day, Sam Altman appeared on Tyler Cowen’s “Conversations with Tyler” podcast and said, “Given the magnitude of what I expect AI’s economic impact to look like, I do think the government ends up as the insurer of last resort.”

Now, to the average listener, it may sound like multiple members of OpenAI’s C-suite asking for the federal government to guarantee that it won’t let the company fail should, say, it turn out to not be able to generate anywhere near the revenue it has projected or pay back the massive financial promises it has made. But, rest assured, they insist that is not what they meant by the words that they chose to say.

In a LinkedIn post, Friar walked back the “backstop” phrasing, which she said “muddied the point” that she was making (go ahead and ignore the fact that when the interviewer followed up to ask her if she specifically meant a “federal backstop for chip investment,” she replied, “Exactly”). Instead, she said that what she meant to say was “American strength in technology will come from building real industrial capacity, which requires the private sector and government playing their part.”

Altman also got in on the post-talk corrections, saying in a long X post, “We do not have or want government guarantees for OpenAI datacenters. We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market.” Instead, he clarified, “the one area where we have discussed loan guarantees is as part of supporting the buildout of semiconductor fabs in the US, where we and other companies have responded to the government’s call and where we would be happy to help,” which he noted is “different from governments guaranteeing private-benefit datacenter buildouts.”

So okay, OpenAI was definitely not asking for government money to help it make good on its financial commitments that many times outpace its current revenue. Which is good, because at least one government representative said they wouldn’t get it if they were asking.

David Sacks, Donald Trump’s AI czar (who seems to still hold that title despite the 130-day limit on special government employees), took to X to say, “There will be no federal bailout for AI.” Instead, Sacks said, “we do want to make permitting and power generation easier. The goal is rapid infrastructure buildout without increasing residential rates for electricity.”

Great, seems like everyone is on the same page! OpenAI is definitely not asking for the federal government to provide financial guarantees for its seemingly endless spending spree on data center commitments that it needs to keep its operation afloat, and the federal government is definitely not offering that money over fears that the company at the center of the economy’s only growth sector could go belly up. Everything seems very normal and on the level here, glad we got that all sorted out.