Anthropic, Musk outline dueling approaches to AI-era philanthropy

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Oct 19 (Reuters) - Anthropic and Elon Musk laid out starkly contrasting approaches to redistributing part of the proceeds of the AI boom, with the Claude developer committing 5% of its shares to an ​unprecedented new fund for the "public good," while Musk pledged to give one SpaceX share to "every kid in America," arguing for such direct distributions as the burgeoning sector faces growing public scrutiny.

AI safety concerns have multiplied following security breaches by AI systems and dire warnings from industry heads about the possibility of severe, even existential, risks of runaway AI development in addition to public concerns ‌about potential job losses.

While Anthropic is betting on distributing wealth through ways including nonprofit donations and direct contributions to specific populations, Musk has said he recommends "giving the shares directly to the public".

"Next year, I will give one of my SpaceX shares to every kid in America. This ⁠will be the first of many," Musk, who runs Anthropic rival SpaceXSI, said in a post early on ​Monday. He held about 6.42 billion shares in the company as of June.

SpaceX shares were up ⁠about 1% in afternoon trading.

Anthropic said that its initiative will give it more flexibility and scale to make donations for the benefit of humanity. The company is planning one of the biggest IPOs in history as a ‌public benefit corporation, a legal structure that requires management ‌to balance broader public interests with profitability goals.

The flotation could value it at roughly $2 trillion, although Reuters exclusively reported last week that some investors are weighing a lower valuation of ⁠around $1.5 trillion. That would value a 5% stake toward the fund in a range of $75 billion to $100 billion.

That would dwarf the still substantial ⁠potential value of Musk's share giveaway, which would be worth roughly $11 billion at current share prices based on US census figures showing there are 72 million children in America.

"Giving shares, which are stakes in the future economy, directly to the people is the way," Musk argued.

Musk's move comes months after the White House launched "Trump Accounts," a cradle-to-adulthood investment program that will provide US citizens born between 2025 and 2028 a government-funded investment account of $1,000 that families can build on.

With the option for individuals and corporations to donate equity shares to the accounts, many top US companies have already pledged support for the program with employer matches or additional funding, including Dell, Visa, Micron and Delta Air Lines.

Earlier this year, SpaceX President Gwynne Shotwell and her husband pledged a share of their SpaceX stock to each ‌of more than two million children under the Trump initiative.

It was not immediately clear whether Musk's share donations would be linked to Trump Accounts or ​come with any kind of lockup period. SpaceX did not immediately respond to a request for more details.

"That's a lot of shares ... I'm sure somebody will be happy to take them," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management, who does not hold SpaceX shares in the portfolios he manages.

"It feels like a publicity stunt ... Will it create positive public sentiment? Perhaps."

Michael Dell and his wife, Susan, have pledged $6.25 billion in cash for Trump Accounts, aimed specifically at underprivileged children. In contrast, the value of Musk's contribution will depend on SpaceX's often volatile share performance.

Most of Musk's philanthropic efforts have been through the Musk Foundation, which reportedly holds more than $14 billion in assets.

Berkshire Hathaway Chairman Emeritus Warren Buffett, one of the most prominent figures in philanthropy, is reported to have given away $60 billion so far, with most of the rest of his roughly $150 billion fortune slated for philanthropy too. The Bill & Melinda Gates Foundation has distributed more than $100 billion since its founding in 2000, with some of that ​fueled by donations from Buffett.

LABOR MARKET IMPACT CITED

Anthropic, which has positioned itself as a safety-first AI lab, has said AI could pose "catastrophic or existential risks to humanity."

The company said in its blog post its Public Benefit Fund could support initiatives including direct distributions to specific ‌populations and efforts ‌to address AI's impact on the labor market, ⁠building on a previously announced $200 million commitment to study and address labor-market disruption.

Its proposed fund would be established as a wholly owned limited liability company and would receive an additional 2% of Anthropic's shares, at the board's discretion, for every 50% increase in the company's value above a baseline that has yet to be disclosed.

Global companies have cut thousands of jobs after investing heavily in AI, with many, primarily tech firms, pointing to higher efficiencies from the technology's rapid adoption.

NOT FOR POLITICAL GIVING

The AI giant said none of the equity held by its fund would be used for lobbying or political giving in the US or abroad.

US policymakers are weighing greater oversight of ‌AI and companies are stepping up efforts to shape ​how the technology is regulated.

Combined with its co-founders' pledge to donate 80% of their equity and an employee donation matching program, ‌roughly 20% of Anthropic's shares will be dedicated to ⁠public purposes, excluding any additional shares added later.

Anthropic ​said it would say more soon on the fund's governance, structure and the valuation thresholds that could expand its ownership stake.

(Reporting by Abu Sultan and Anusha Shah in Bengaluru; Additional reporting by Lewis Krauskopf; Editing by Edmund Klamann, Cynthia Osterman, ​Christian Plumb and Deepa Babington)

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