How Elon Musk’s xAI is quietly taking over X

When Elon Musk launched his own AI startup, xAI, he touted a key advantage over his competitors: access to the vast trove of data from his newly acquired social media platform Twitter. By implementing new API fees on the network he quickly renamed X, Musk locked out other AI companies, maintaining exclusive access for his own models. And he began using X’s millions of users to test the results.

Musk has been using this distribution channel since xAI launched its first version of the Grok large language model, adding features like trending story summaries and AI-generated questions on posts as well as releasing the Grok chatbot (initially) to X users exclusively. Now, a slew of new AI features is coming. Per the findings of reverse engineer Nima Owji, the platform appears to be developing AI-powered post enhancements, including a feature that lets Grok modify your tweets. The chatbot also appears to be adding location-based queries, letting users ask about things nearby, like grocery stores.

xAI’s takeover of the platform once known as Twitter is so unmistakable that even its branding has crept into X’s most visible real estate, with “xAI Grok” now commanding prominent placement in the app’s main toolbar — a striking symbol of how Musk’s AI ambitions have come to dominate the social network. An xAI employee poked fun at their company’s expanding presence, sharing an image of X’s timeline overrun with the xAI logo.

xAI and X have perhaps the closest and most complex relationship of all of Musk’s companies. On paper, all xAI staffers are also X employees (but not the other way around); on top of access to the code base, they have company laptops from X and appear in the platform’s Workday HR software as X employees. After X vacated its flagship San Francisco HQ in September, the staffers moved into xAI HQ at the Stanford Research Park in Palo Alto. X offers xAI an instant pipeline to millions of users — far more efficient than building Grok’s audience from scratch. With xAI’s newly acquired Colossus cluster of 100,000 GPUs, deploying AI features across X has also become more technically feasible.

Musk has a history of creating intertwined, interdependent companies. Tesla and SpaceX share engineering expertise, for instance, and after Musk acquired Twitter, Tesla and Boring Company teams were a common sight in its offices. Proponents of Musk consider this a genius strategic advantage. Critics argue that the intricate relationships between his ventures could create conflicts of interest, blur the lines of accountability, and expose the companies to shared vulnerabilities.

On paper, all xAI staffers are also X employees (but not the other way around)

The relationship between X and xAI is complex, with varying levels of collaboration between their teams, sources tell The Verge. While Musk holds separate meetings with both X and xAI engineers, the extent of day-to-day cooperation between the companies remains unclear. For six months, xAI brought on ex-Meta and Discord product leader Nikita Bier to guide AI implementation on X’s platform, including the addition of AI-generated questions to posts — notably, Bier worked exclusively with xAI, rarely engaging with X’s team. (Before Grok’s release, X had considered building its own generative AI team under Musk’s cousin James). Some talent does flow between the companies — LinkedIn shows xAI recruited two X engineers in September.

The funding raised for xAI is separate from what is raised for X, a setup that highlights their stark difference in value. xAI has seen meteoric growth, reportedly securing a $50 billion valuation and effectively doubling its worth in mere months. Meanwhile, X has struggled to maintain value. Its most recent employee stock grants in October 2023 valued the company at $19 billion, less than half of Musk’s $44 billion purchase price. X employees, who received RSUs at $45 per share, have been waiting over a year for new stock grants while watching their sister company’s valuation soar. During xAI’s first funding round, Musk said investors in X would own 25 percent of xAI, but that hasn’t materialized for X employees who own X stock.

And while xAI benefits tremendously from its link to X, it’s unclear whether X users have benefited much from xAI. Not long after X rolled out the Grok-powered Stories feature, it began spitting out garbage: it produced headlines that claimed Vice President Kamala Harris was shot after the attempted assassination of Donald Trump; misunderstood a bunch of shitposts about New York Mayor Eric Adams, saying he deployed 50,000 police officers to an earthquake; and erroneously claimed in an AI-generated headline “Iran Strikes Tel Aviv with Heavy Missiles.” (Grok, obviously, isn’t the only AI service with this problem.)

Do you work at xAI or X? I’d love to chat. You can reach me securely on Signal @kylie.01 or via email at [email protected].

Despite the unconventional entangling of the two companies, it’s unlikely that the two will fully merge anytime soon. The ideology behind xAI is the familiar starry-eyed futurism that runs deep in the tech scene: open-source superintelligence, meteoric growth, and SpaceX-level dominance in AI (or, at least, that’s what Musk pitched at an xAI recruiting party a few months ago). It’s exactly the kind of audacious moonshot that makes Silicon Valley’s top talent and deepest pockets lean forward in their chairs.

Meanwhile, at X, some staffers joke that they’re no longer Musk’s favorite child. That much is clear in the product. His dream of making it into an “everything app” has failed to materialize, the plans to launch payment features have stalled, advertisers continue to flee from Musk’s controversies, and upstarts like Bluesky and Threads threaten X’s dominance. The separation keeps Silicon Valley’s newest moonshot untethered from the messy reality of running a social network.

The platform Musk claims he bought to protect free speech now seems to serve a different purpose entirely: a private testing ground for his AI ambitions. It’s an unconventional arrangement. But it seems to suit Musk perfectly.