All about Stargate, the AI project splitting Musk and Trump

Summary

POLITICO Tech: "All about Stargate, the AI project splitting Musk and Trump"

Release Date: January 23, 2025
Host: Stephen Overlea
Guests: Krista Marshall, Energy Technology Editor at E. News

Introduction

In this episode of POLITICO Tech, host Stephen Overlea delves into the ambitious AI infrastructure initiative known as Stargate, which has sparked a notable rift between tech mogul Elon Musk and former President Donald Trump. The project, which aims to invest $500 billion in AI data centers across the United States, has significant implications for both technology and energy policy.

Unveiling Stargate

Stargate is a monumental initiative designed to bolster the United States' AI capabilities through extensive investment in infrastructure. Announced by Donald Trump alongside leaders from OpenAI, Oracle, and SoftBank, the project emphasizes the construction of large-scale AI data centers, with the first site already under development in Abilene, Texas. Each data center building spans half a million square feet, underscoring the vast scale of this endeavor.

Krista Marshall explains, "Stargate is a company that plans to invest $500 billion over four years in AI infrastructure and data centers to power AI. And it has some of the biggest tech names out there, including SoftBank, OpenAI, Oracle, and MGX as the main investors." (03:40)

Trump's Strategic Role

While the Stargate initiative was in motion before Trump's presidency, his administration has actively sought to accelerate its progress. During a White House announcement, Trump highlighted his commitment to the project, mentioning potential emergency declarations and efforts to streamline permitting for data centers.

Krista Marshall notes, "Trump said at the White House, with leaders from these companies, that he wanted to do, quote, a lot to help build Stargate projects. He mentioned emergency declarations, and he indicated he would do everything in his power to help this project and its mission." (03:58)

Trump's focus on energy demand underscores the interconnectedness of AI development with national energy policies. His administration has advocated for increased investments in fossil fuels and clean coal, aiming to meet the substantial electricity needs of burgeoning AI infrastructure.

Energy Implications and Challenges

The expansion of AI data centers through Stargate poses significant challenges for the U.S. energy grid. Data centers are projected to account for 12% of U.S. electricity demand by 2028, a threefold increase from current levels. Krista Marshall emphasizes the critical question of sourcing sufficient energy to power these centers:

"The demands of Stargate, I mean, the energy demands are likely to be similar to the energy demands of other AI and data center projects. The main question is what energy sources are going to come online to meet this surge in demand." (06:13)

Different states face unique challenges based on their existing energy mixes. For instance, Texas relies heavily on fossil fuels, whereas California is more diversified with renewable sources. Marshall points out that local utilities and public utility commissions (PUCs) will play pivotal roles in determining how to meet the energy demands, with federal policies and executive actions further influencing the landscape.

Political and Environmental Reactions

Stargate has not only become a focal point for technological advancement but also a battleground for political and environmental debates. Senator Chuck Schumer criticized Trump's executive orders, highlighting the contradiction between promoting AI-driven energy demands and rolling back clean energy initiatives.

Marshall states, "Earthjustice and environmental groups have urged the tech leaders involved with Stargate to use low-carbon energy, expressing concerns about potential increases in pollution and fossil fuel use." (09:39)

Elon Musk's public disapproval adds another layer of controversy. On his social media platform X, Musk questioned the financial viability of Stargate, leading to a direct challenge from Sam Altman, CEO of OpenAI. Altman countered Musk's claims, inviting him to visit an operational data center and urging him to prioritize national interests.

Altman remarked, "I realize what is great for the country isn't always what's optimal for your companies, but in your new role, I hope you'll put the US First." (Timestamp not specified)

The Musk-Trump Rift

The tension between Musk and Trump is emblematic of broader conflicts within the tech community and political spheres. Musk, who holds significant influence in the tech industry, especially through his role in SpaceX and formerly OpenAI, appears to be distancing himself from the Stargate initiative, raising questions about his current influence within the Trump administration.

Stephen Overlea observes, "Elon Musk is Trump's closest confidant in tech. He literally has an office in the White House, and he and Sam Altman do not get along and he clearly has some doubts about this whole initiative." (11:43)

This personal and ideological clash highlights the complexities of high-stakes tech projects intertwined with political agendas. The outcome of this dispute could significantly impact the direction of AI development and energy policy in the United States.

Future Outlook and Conclusions

The Stargate initiative represents a pivotal moment in the intersection of technology, politics, and energy policy. With substantial investment and high-level backing, Stargate has the potential to propel the U.S. into a leading position in AI development. However, the project also brings to the forefront critical issues related to energy sustainability, environmental impact, and political dynamics.

Krista Marshall concludes, "Stargate shows the influence of the big tech community on this administration more than any we've seen with other administrations. It'll be interesting to see which side wins and if Musk's view on this prevails at all." (12:26)

As the initiative progresses, stakeholders will closely watch how these competing forces shape the future of AI and energy in America. The interplay between technological ambition and political strategy will likely continue to drive significant discourse and decision-making in the months to come.

Key Quotes

• Sam Altman, CEO of OpenAI:
  "I realize what is great for the country isn't always what's optimal for your companies, but in your new role, I hope you'll put the US First." (04:XX)

• Krista Marshall, Energy Technology Editor at E. News:
  "Stargate is a company that plans to invest $500 billion over four years in AI infrastructure and data centers to power AI." (02:43)
  "Earthjustice and environmental groups have urged the tech leaders involved with Stargate to use low-carbon energy." (09:39)

• Elon Musk:
  Criticized Stargate on X by stating, "they don't actually have the money." (Exact timestamp not provided)

Implications for Stakeholders

• Tech Companies: Must navigate the evolving landscape of AI infrastructure while addressing energy sustainability.
• Political Leaders: Balancing economic growth in AI with environmental responsibilities and energy policies.
• Environmental Groups: Advocating for low-carbon solutions to mitigate the environmental impact of expanding AI data centers.
• Consumers: Potential benefits from advancements in AI technology contrasted with concerns over energy consumption and environmental effects.

Conclusion

The Stargate project epitomizes the transformative potential and challenges of integrating advanced AI infrastructure within national policies and energy systems. As internal conflicts among tech leaders like Musk and Altman emerge, the project's success will hinge on collaborative efforts to balance innovation with sustainability. POLITICO Tech continues to monitor these developments, shedding light on the critical intersections shaping our technological future.

Transcript

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[Stephen Overlea]

Hey, welcome back to POLITICO Tech. Today's Thursday, January 23rd. I'm Stephen Overlea. Earlier this week, Donald Trump brought the leaders of OpenAI, Oracle, and SoftBank to the White House and announced they will spend $500 billion to build AI data centers in the U.S. the initiative is called Stargate, and it was already underway before Trump took office. But the White House photo op is exactly the kind of spectacle Trump likes. Well, then along comes Elon Musk. He dissed the whole venture on X, his social media platform, simply posting, quote, they don't actually have the money. That inspired a clapback from Sam Altman, the CEO of OpenAI, who said Musk was wrong and invited him to visit one of the data centers already under construction. Altman said, I realize what is great for the country isn't always what's optimal for your companies, but in your new role, I hope you'll put the US First. So the techies are fighting and the president is in the middle of it. To get the download on Stargate, I called up Krista Marshall. She's the energy technology editor at E. News and writes about the challenges all of these data centers pose for the US Energy grid. We talked about what Stargate is and what Trump might do to spur it along. Here's our conversation. Hey, Christa, welcome to Politico Tech.

[Krista Marshall]

Thanks for having me.

[Stephen Overlea]

So President Donald Trump joined tech CEOs in announcing this new AI infrastructure initiative. It's called Stargate, which is getting a half billion dollars in private investment. What exactly is this thing?

[Krista Marshall]

So Stargate is a company that plans to invest $500 billion over four years in AI infrastructure and data centers to power AI. And it has some of the biggest tech names out there. SoftBank, OpenAI, Oracle, and MGX are the main investors. Microsoft, Nvidia, and ARM are assisting on the technology side. This had some roots before Trump took office. OpenAI CEO Sam Altman had been pushing for a coalition to boost AI for months, so there had been some previous AI announcements from the involved companies. Construction has already begun on data centers at a site a Stargate site in Abilene, Texas. And to give you an idea how big these data centers are, each building housing them at the Texas site is a half million square feet.

[Stephen Overlea]

Got it. So huge. Half a million is huge. Yeah. And so this money, as you said, it's coming from these companies, it's coming from industry. They needed these data centers even before Trump became president. This construction is underway. So what is Trump's role here?

[Krista Marshall]

So it's not fully clear yet what the administration will do to boost Stargate, but Trump said at the White House, with leaders from these companies, that he wanted to do, quote, a lot to help build Stargate projects. He mentioned emergency declarations, and he indicated he would do everything in his power to help this project and its mission. So it's possible there could be more executive orders coming and. Or a push potentially, to streamline permitting for data centers. I would expect Trump, in some of his picks for Cabinet positions, like Doug Burgum, who's up for Interior Secretary, have made clear that electricity demand from AI is a key driver of the administration's broader energy policy. Yeah. Bergam said at his confirmation hearing, for example, that there should be investments in clean coal to help meet the demand for AI. Trump has also made clear that he'd like to see more development of fossil fuels and more drilling to help the technology. So the president clearly cares a lot about this. Before his inauguration, he announced another data center initiative with real estate developer Hussein Sajwani, who was planning to build or invest 20 billion to build data centers in eight states. And then in one of his EOs on Monday, the president also cited inadequate electricity supplies and calling for an energy emergency, and also tied that to new technology developments. So it's clearly a big driver. AI is a big driver. Driver of what Trump broadly wants to do with energy.

[Stephen Overlea]

Yeah. Well, it's interesting that even on the campaign trail, the few times we heard Trump talk about AI, it was often in the context of energy demands and sort of this idea that energy, AI and national security are kind of all interconnected. And we heard that in his remarks earlier this week, I think when he referenced China being a competitor on AI, he sort of sees all of these as part of a national security and a competitiveness imperative, ultimately.

[Krista Marshall]

So the demands of. Of Stargate, I mean, the energy demands are likely to be similar to the energy demands of other age and data center projects. And we know that's a huge, huge amount. As one example, the Lawrence Berkeley laboratory in December reported that data centers alone could account for 12% of U.S. electricity demand by 2028. I think a tripling of where it is now. The main question that's out there then with Stargate and with data centers in general, is what energy sources, additional energy sources are going to come online to meet this huge surge in demand to build out AI. And so with Stargate, some will depend on where the projects that have not yet been announced are selected, in that states have different states have very different electricity mixes. I mean, what powers the grid in Texas, for example, is very different from California. But broadly, states are saying that they're very unclear about how they're going to meet the demand. Virginia, for example, which is one of the world's largest data center hubs, put out a report at the end of last year warning it may not be able to or it may not be achievable to meet half of the demand projected from data centers. A lot will be decided by utilities and PUCs at the local level. But Trump and Congress could have a major effect on where things go with what's brought on the grid, which ultimately will affect data centers. For example, a lot of the IRA and infrastructure law money has still not gone out the door from federal agencies. And one of the executive orders put a pause on distributions from those laws, which could affect a lot of clean energy projects, for example.

[Stephen Overlea]

Right.

[Krista Marshall]

Yeah. And so, and then there's things like Trump's crackdown on offshore wind leasing, which could curtail the contribution of that industry to electricity. And then, you know, you have Trump talking about things like increased tariffs on China, which could really affect grid batteries, for example, which are largely built in China and are paired with solar, a lot of solar projects. And then, of course, you have the whole debate about the climate law and whether tax credits are going to be overturned. And so all of that, you know, the broader outlook of Trump's energy policy and what Congress does could affect what's built in the US which will ultimately affect what powers these data centers.

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[Stephen Overlea]

You know, that was one question I had, which is, you know, all these increased energy demands, which will be fueled by projects like Stargate, are coming at the same time that we just saw Trump roll back a lot of clean energy initiatives. And so he has been taking some flack for that. How are critics and sort of clean Energy advocates responding to this.

[Krista Marshall]

So Chuck Schumer spoke on the floor criticizing Trump's executive orders and he mentioned AI, essentially saying that Trump is speaking on both sides of his mouth and that he's talking about this huge need for electricity, but at the same time putting out these executive orders that cut the IRA spending, that stop leasing for offshore wind, and putting a halt to regulations. So it will be really interesting to see how much Democrats and environmentalists use the AI issue to push back on Trump's energy policy. In my story on Stargate, Earthjustice and Environmental group, for example, urged the tech leaders involved with Stargate to use low carbon energy, saying they're really worried that this could lead to more pollution, more fossil fuels coming online. Another interesting critic's that has emerged on Stargate is Elon Musk, who is heading as the Department of Government Efficiency to try to cut government waste. He spoke out on X late at night, claiming that some of the business partners for Stargate don't really have the funds to do this AI build out. And that led into X clash with OpenAI's CEO, Sam Altman, who's involved with Stargate, saying that Musk is wrong and that he invited Musk to come see one of the projects. And I mean, it's the kind of thing that goes on on X. But what's interesting is it's an early test of Musk's influence since Trump made such a big deal out of this Stargate initiative, bringing them all to the White House and making the announcement about this 500 billion at the White House. So to have Musk sort of coming out against it or trying to undercut it, it'll be interesting to see if it affects Trump, you know, if it, if it's showing that Musk's influence is waning, at least in this realm.

[Stephen Overlea]

No, totally. You know, there's kind of long standing beef between Sam Altman and Elon Musk. They're broiled in lawsuits over kind of OpenAI and its business structure. And yeah, it's fascinating for me as a tech journalist to kind of see those fights now kind of spill into Washington because exactly as you said, Elon Musk is Trump's closest confidant in tech. He literally has an office in the White House and he and Sam Altman do not get along and he clearly has some doubts about this whole initiative, which clearly Trump is very proud of. So, yeah, the personalities, I think will be as interesting as the policy to watch in this one.

[Krista Marshall]

Yeah, yeah, I think so. I mean, and it's interesting in that it really shows the Stargate announcement shows the influence of the big tech community on this administration. I mean, it's in some ways more than any that we've seen with other administrations. And so who becomes I mean, we know that Musk is obviously the leader of that part of the influence realm, but it'll be interesting to see which side wins and if, if Musk's view on this prevail at all.

[Stephen Overlea]

Absolutely. Well, listen, Krista, appreciate you being with us here on Politico Tech.

[Krista Marshall]

Sure, Absolutely. It was fun. Great to talk to you.

[Stephen Overlea]

That's all for today's Politico Tech. If you enjoy Politico Tech, please subscribe. And for more tech news, subscribe to our newsletters, Digital Future Daily and Morning Tech. Our managing producer is Annie Reiss. I'm Stephen Overle. See you back here tomorrow.