Emil Michael, a senior Pentagon official with responsibility for overseeing the Defense Department's AI programs, sold millions of dollars worth of xAI stock while in his government role, according to a Guardian report published April 9. xAI is Elon Musk's AI company, best known for the Grok chatbot.
The conflict is straightforward on its face: a person with influence over U.S. defense AI spending held a financial interest in one of the AI companies that could benefit from Pentagon attention and contracts. Federal ethics rules require officials to either divest conflicting holdings or formally recuse themselves from relevant decisions. Whether Michael did either - or whether the sales themselves were the required divestment - isn't clear from the available reporting.
The timing compounds the problem. The Pentagon has been significantly expanding its AI investments over the past two years. xAI has been positioning Grok as an enterprise-grade tool and has been increasingly visible in conversations about AI for national security and government use.
This isn't the first time AI company relationships with the current administration have drawn scrutiny. But a sitting defense official holding stock in a specific AI company while directing AI policy is a cleaner conflict than most. Expect the DOD ethics office and Congressional oversight committees to start asking questions quickly.