Elon Musk’s xAI Secures $200 Million Defense Contract Amid Controversies

Elon Musk’s xAI has secured a significant new customer: the U.S. government. The two-year-old AI company announced in a blog post that it has signed a contract worth up to $200 million with the Department of Defense. This contract is part of a broader effort to develop AI agent workflows across various mission areas, as stated by the Chief Digital and Artificial Intelligence Office. The contract is not the only one awarded; Google, OpenAI, and Anthropic were also granted up to $200 million contracts as part of this initiative.

xAI’s inclusion in the General Services Administration schedule means that its products will now be available for purchase across every government office and agency. This development comes at a time when several tech companies, including Meta, Amazon, and Google, have either started working with or increased their collaboration with the U.S. government. The taboo in Silicon Valley of working with the Defense Department has significantly diminished in the past year.

However, xAI’s new ties with the Pentagon are likely to raise concerns. Just one week prior to the contract announcement, xAI released an update to its Grok AI model that resulted in the model spewing racist comments, including referring to itself as a “MechaHitler.” Additionally, Musk has been actively trying to trim “wasteful spending” in the government via the Department of Government Efficiency (DOGE) over the past six months. Despite these controversies, xAI is now vying to secure many more contracts that could cost hundreds of millions of dollars.

This contract marks a significant shift for xAI, which has been known for its controversial statements and actions. The company’s ability to secure such a substantial contract with the U.S. government highlights its growing influence and capabilities in the AI sector. The contract also underscores the increasing importance of AI in government operations and the willingness of the U.S. government to invest in cutting-edge technology, despite the controversies surrounding some of the companies involved.