FOR IMMEDIATE RELEASE: May 25, 2022

Contact: Michael Clauw, mclauw@campaignforaccountability.org, 202.780.5750

WASHINGTON, D.C. – Today, Campaign for Accountability (CfA), a nonprofit watchdog group that runs the Tech Transparency Project (TTP), released a report examining America’s Frontier Fund (AFF), a brand-new public/private investment vehicle that could grant former Google CEO Eric Schmidt unusual influence over U.S. national security policy and, potentially, the opportunity to steer taxpayer money to his pet projects. The fund will be led by well-known members of the defense establishment and close associates of Schmidt’s ventures in business, finance and public policy. A draft press release that was briefly uploaded to the AFF website before being taken down listed Schmidt among the new group’s “Board of Directors and anchor funders.”

Read the report.

Campaign for Accountability Executive Director Michelle Kuppersmith said, “When Eric Schmidt and his pals purchased a fighter jet during his tenure as Google’s CEO, reasonable people maybe dismissed that as a billionaire’s eccentricity. Now, as a private citizen, he is set to exert an inordinate amount of control over the direction of taxpayer security dollars. Without proper oversight, AFF runs the risk of prioritizing its principals’ bottom lines over the best interest of American citizens.”

To date, AFF has revealed little about its operations. The draft release says it “will leverage private, public, and philanthropic capital to build and scale the next generation of foundational technologies.” Other publicly available documents shed some additional light on its plans. A job posting notes that AFF’s primary government clients will include the Departments of Commerce, Defense, and Energy and, in the future, state-level clients.

AFF’s staff and structure appear to borrow heavily from In-Q-Tel, the nonprofit venture capital fund backed by the CIA and other intelligence agencies. AFF’s reliance on In-Q-Tel raises the prospect that the new fund may be plagued by the same kinds of conflicts of interest that have dogged the two-decade old CIA venture. Nearly half of In-Q-Tel’s trustees had a financial connection with companies backed by the CIA fund, according to a 2016 report in the Wall Street Journal.

It is also unclear whether the new fund and its principals will be subject to any governance controls to prevent abuse of power. One concern is that AFF could confer a special seal of approval by the U.S. government on highly speculative investments by its well-connected principals. The prospect of a government contract, especially in the lucrative area of defense, could generate outsized gains for early investors. It is also unclear if any safeguards could prevent AFF principals from profiting from their inside knowledge and ability to direct public investments.

The risk is particularly serious for Schmidt, who is reported to have “invested millions of dollars into more than half a dozen defense startups,” and could use his influence over AFF to direct public funds to startups in which he is an investor. According to the draft press release, the fund’s “initial areas of focus include microelectronics, artificial intelligence, and advanced networks (5G/6G).” Schmidt holds personal investments in the two former categories and Google’s parent company, Alphabet, stands to benefit significantly from the development of 5G—as does Schmidt, who continues to hold millions of shares of Alphabet stock.

Ms. Kuppersmith continued, “The opportunity for AFF insiders to direct taxpayer dollars toward projects that profit them personally is tremendous. While additional clarity on government safeguards to prevent this type of abuse may be forthcoming, those measures will have to be quite substantial to eliminate any justifiable suspicions that this fund may be misused.”

Campaign for Accountability is a nonpartisan, nonprofit watchdog organization that uses research, litigation, and aggressive communications to expose misconduct and malfeasance in public life and hold those who act at the expense of the public good accountable for their actions.