Michael Kratsios in conversation with Santi Ruiz

Absolutely. That sounds great.

Well, I'll tell you that was one of the most exciting speeches I think we gave this term. I think it really set the foundation for where we want to go as a country on technology policy more broadly. And I think you brought up the main thrust of the speech was around technological stagnation. To me, I think it's an absolute tragedy the extent to which progress in the world of atoms has slowed down over the last few decades and we point to a lot of those examples in the speech itself and I think part of the way we're going to get out of it is the agenda that the president is laying out and the important role that the federal government play in driving broader scientific and technological discoveries. So that kind of laid out the vision for what tech policy is for the Trump administration and it's something we've been charging ahead on and things like nuclear energy and AI and lots of other stuff that you probably want to cover.

Well, I think to ensure our long-term economic and national security, we have to continue to drive and innovate here in the US. And to me, I think one of the biggest drivers or reasons why we as a country will succeed is because of the innovation that we can have in science and technology. And I think there's a very deep and rich history of the federal government in the United States being part of a larger innovation ecosystem. And they play different roles in different eras based on the challenges of the day. You look back to the sort of Manhattan project as kind of one of the big obvious examples. We had to come together as a government with the private sector to develop something that could help us ultimately win the Second World War. You move ahead to things like the Apollo project where again it was a federal effort that was able to work with lots of folks in the private sector to cement our leadership in the space race and I think there's so many other examples and I think the challenge that we have faced over the years and one thing that we think a lot about at this office is the changing nature of where early stage basic pre-competitive research and development happens and if you go back to the era of post World War II, the vast majority of R&D was being funded by the federal government. And over the last 70 years, we've had this inversion or this flip where now the majority of R&D is funded in the private sector. And we have to ask ourselves every day sort of what role does the federal government play in a world where the private sector is investing more than any time in history in this research and development. And I think the biggest example, the one that's kind of screaming in our face every day is with AI. You look at these numbers of the types of investment that are happening in infrastructure and R&D that's supporting the AI revolution. And I think even for a lot of us that are deeply immersed in tech and have been for decades. I mean, these numbers are crazy. They are like truly unbelievable levels of investment. And it doesn't seem like it's stopping. You know, every week there's a new big one. And I guess for policy makers like us here in Washington, we have to sit back and say like look, there is billions if not trillions of dollars being invested by the private sector in AI, but what role can the federal government play? And that's the same type of question we asked for any of these emerging technologies. And I think going back to the speech, the point was that there always will be a very important role to play and the government has to make that choice to say like we do not accept that stagnation. We want to work hand in glove with the private sector to make it happen. And there are levers that we control which can actually make a big difference.

Yeah. So, it all began actually the third day of the administration where President Trump signed an executive order revoking the disastrous Biden executive order on AI and essentially gave us an 180-day shot clock where myself, Secretary Rubio and David Sachs were on the hook for delivering the next national strategy for the US called the action plan. And we delivered it in July and that was launched at an event here in Washington. The same event, the president signed three executive orders that generally map to some of the priorities in the plan. But the vision essentially laid out in the plan has three core policy thrusts or main pillars. The first is the US has to continue to out innovate and continue to be the leader in AI innovation and there's lots of work in there around regulatory issues around R&D and we can get into those. The second is the US has to lead on AI infrastructure. This revolution is going to be powered by electricity and by data centers and we have to have those built in the United States as quickly as humanly possible. And there's a lot we can do to accelerate that process and get the government in a way as we build that infrastructure. And the third is the importance of exporting American AI essentially creating an ecosystem globally that is reliant on American technology and lots of projects are being launched on that front as well. But thematically that's kind of the core themes of the action plan. There are almost 100 actions enumerated in it but they generally fall into those three buckets.

Yeah, I think of them actually in concert, not in opposition. I think for us the core challenge we're facing and maybe if we zoom out and think a little about how we got to that third pillar it kind of actually came out to a lot of work that we did in Trump 45 around telecom and if you think of that era, the first sort of big rollouts of 5G happened kind of the tail end of Trump 45 and you know we as a country found out pretty quickly we were in a really tough spot we had the manufacturer of advanced telecom kit. There were two allied partners with Nokia and Ericsson that could provide those. And then you had an upstart which was pretty good which was Huawei. And in the early days of that challenge, you know, one could argue that the Huawei technology certainly was inferior to the US technology. But nonetheless, because of the heavy subsidy by the PRC, they were able to aggressively go out and get their kit all over the global south and even deep into the networks of some of our partners and allies. And, you know, me as the CTO of the United States and kind of our tech minister was left running around the world talking to my counterparts trying to convince them to either rip and replace their Huawei or make the expensive decision to buy Ericsson, Nokia. And the lesson that there were a couple lessons that I learned out of that. I think the first was that just because you have the very best technology that doesn't mean it's going to be adopted. Price actually does matter and the ultimate buyers are ultimately going to be quite price sensitive. Especially if at the end of the day you can get pretty much the same service by someone else. And also that created sort of a very interesting national security problem for the US where a lot of these networks could potentially be compromised and could have sort of back doors back to the PRC and that's something that we were very worried about and wanted to share. Now, if you fast forward to where we are today, you know, one could argue that the export of American AI is arguably even more important than telecom in the sense that the models of choice and the stacks that are used around the world are going to be critically important in the way that lots of governments and economies around the world function. The ultimate software that is used to power health care services to run tax services to essentially be the platform in which all of governments run all their AI services is really really important and you want to be in a position where American models are the ones that are fine-tuned to solve all of these to run all these applications ultimately. Now the advantage we have and why it's different than before is that we actually do have the very best technology and I think China at the moment is actually quite constrained in their ability to actually fabricate enough chips for export. You know the ones that do fabricate domestically there's more than enough demand internally. There just isn't enough access to exports. So we have this window of time in the next year or two where we truly can be sort of the single powerful supplier of the totality of the stack meaning chips, models and applications. And the other advantage we have in before is we America our companies are leading in all three layers. We have the very best chips in the world. We have the very best LLMs in the world and we have the very best applications on top of it. So the thesis of the program is let's try to bring all those together make turnkey solutions that countries around the world can easily adopt and implement and do that as quickly as possible so that we can start you know creating these networks and these ecosystems where developers and countries and governments around the world are all using American technology.

Yes. Yeah. So, we, you know, the president signed executive order in July of this year. There's a shot clock at the Department of Commerce to sort of stand up the program actually in the next week or two. So, you'll see some announcements out of commerce coming soon. And then kind of the ball is ultimately handed to a committee that's led by the Secretary of State that includes Secretary of Commerce and me and a few others to actually go out and do the export early next year. What we want to do is get, I mean we want the world to know that America is open for business. We want the world to be running on our technology stack which we think is the best and we want to go out in the world and tell them that you know I was at the APAC digital ministerial in Korea a few months ago where we shared this message and we essentially said that the US is open for business. We do want to sell you chips and we deeply believe that the ideals and the priorities that you have as countries ultimately are ones that align with the US. I think it kind of goes back a little bit to the sovereignty question you have there and I didn't quite answer it but to answer it I think the reality is we have a stack which can answer the mail to the priorities of individual countries. If you're a country and you have sensitive government data you obviously don't want to be running an AI system where there's an API call to a foreign country even if it is the United States. We understand that and the hope is that we can design a system with the great technology companies we have today which can allow them to operate American software in a way that makes that ultimately is able to sort of meet whatever standards they have in country.

Yeah, I think generally think about protect, it's a little bit of what you said and it's a lot about the world of exports and constraints for some of our adversaries from accessing our highest end technology. So, on one hand, there's an incredible amount that we need to do to secure our critical infrastructure. We have a new national cyber director here at the White House that's very focused on that along with the folks at DHS and we continue to be and need to be very vigilant in tracking the type of hacking that ultimately happens by a lot of our adversaries and we see it all the time and it's disheartening but we got to do better. Now on the more protect side of technology I think what a policy that we've kind of maintained and kept in place is particularly in the world of AI our most high-end chips are ones that we are limiting the ability for adversaries to have access to. And that's something that had started as early as the Trump administration where we put export controls on some of our advanced lithography equipment which ultimately has paid big dividends in limiting the ability of the PRC to develop high-end chips. And that will continue and I think finding that balance of needing to promote as much as possible get American tech out there and also rate limit our adversary on the very high-end stuff is kind of the general strategy.

Yeah. So that is all about our sort of second pillar of the strategy is how do we accelerate our ability to build both the data centers and the power capacity. You know, it's a very tricky and interesting problem and I think many people who are deep in this realize it. There is one part that's federal government related and there is certainly NEPA related things you have to get through and other types of federal permitting and that's the stuff that we as a government have a lot of control of and the president directed in his executive order on this AI infrastructure that we need to as quickly as possible accelerate that effort to remove those barriers and make it much easier to get your adjudication done on approval or not for your projects. It's an ongoing effort and we want to make it as easy as possible. Essentially a one-stop shop to come to the government and say, 'Look, I want to build this AI infrastructure, help me get all the necessary permits and approvals and we can help you do that.' And that's in the works and that's something that was called for in the executive order and we're excited to keep pushing on that. The second piece which is a little trickier is the state and local and I think if you talk to a lot of people who are building data centers and a lot of people who are trying to do the energy buildout, a lot of the bottlenecks end up at the state and local level. So we're trying our best to liaise with a lot of state governments to try to make it clear that this is a priority for their country. They as a state can benefit if these buildouts ultimately happen. And kind of the third piece around that is parts of things that the federal government controls is we have our own real estate. We have federal lands which can be used for buildouts themselves. And many of you may have been tracking the Department of Energy program. The Department of Energy already has announced four locations for buildouts of data centers and that's already underway and we did that in the first six months of the admin. So it's a lot of that hearkening back to the question you had at the very beginning. It's a lot about thinking about what levers does the federal government have at its disposal to kind of drive this acceleration.

Yeah, I mean maybe there's a slight misunderstanding. So I think in the executive office of president there is no component which has any budget to really do anything. The EOP is designed by law to be an advisor to the president and a convenor to drive interagency policy on a variety of issues. So generally councils at the white house which drive different policy. You have an economic council, you have a domestic council, you have national security council, and you have a science and tech. And each of those has their own category of work. In Trump 45, you know, science and tech was exclusively at our office. The Biden people made the choice to absorb some of the tech effort at the National Security Council based in Trump 47. It's all back in the office that has statute authority over it. But I think what's key for us and I think what I love about this role and I think what makes really our country so unique and special in the way we track S&T is that it actually is a federated approach to science and technology policy in the sense that almost all of my counterparts, you know, my counterpart tech ministers or science ministers around the world, they just have a single agency that attempts to do everything on their own and they have one person that tries to decide the best way to deliver on whatever the mission is of that country. In the US, we're blessed and sometimes it's a little challenging because you're wrangling people, but we're blessed with having lots of agencies that do different aspects of the larger S&T portfolio. You know, at the Department of Energy, you have all of the national labs, almost $10 billion in spending just under the under secretary of science that runs the labs. You have a national science foundation, which is basic research, a neighborhood of about $9 billion. There is NOAA that does everything related to like weather and weather satellites at department of commerce. There is NIST that does all the standard setting. There's USGS that does our geological surveys. There's NASA. So I think you know the most exciting meetings for me are when we convene our NSTC or National Science and Technology Council and all of the agency heads for all science agencies come to the White House and we're able to ultimately chart out, you know, if we want to drive US leadership in AI or quantum or nuclear or 6G, everyone has a piece to play and there isn't one place that's singularly responsible for that. It's each individual agency has a piece of the puzzle and I think that actually creates even more leverage and allows us to do even more things. So it's a lot of fun to bring all these folks together and I think the level of passion in this admin to kind of drive these leadership positions in our core tech areas is pretty special.