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You are at:Home » Xai Secures $200 Million US Military Contract Following Grok Chatbot Controversy
Xai Secures 200 Million US Military Contract Following Grok Chatbot
Technology July 15, 2025

Xai Secures $200 Million US Military Contract Following Grok Chatbot Controversy

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Following the identification of Grok Chatbot as “Mechahitler” and its generation of anti-Semitic content, Elon Musk’s company, Xai, announced a contract worth $200 million with the US Department of Defense. This contract focuses on the development and deployment of artificial intelligence tools for agents.

Additionally, the DOD announced a ceiling of $200 million and similar contracts on Monday with several other prominent AI developers, including Google, Anthropic, and OpenAI. The agency collaborates with the General Services Bureau to make these AI tools accessible to the federal government.

“Incorporating off-the-shelf solutions into a cohesive functional approach will enhance the use of intelligence, business, and enterprise information systems as part of the Warfighting domain’s essential tasks.”


This agreement enhances ties with US military AI developers and is expected to broaden the application of artificial intelligence within the US government. This follows Musk’s so-called “Government Efficiency Office” (DOGE), which has been scrutinized for its oversight in various federal agencies. Until recently, Musk was considered the unofficial leader of DOGE, particularly as he navigated challenges posed by government entities. For more department inquiries, utilize the GROK chatbot.

The announcement of the Xai contract comes on the heels of Grok’s series of controversial posts on X last week, including the endorsement of Nazi ideology and disturbing themes, leading the company to issue a public apology. Xai asserted that the issue was addressed and subsequently launched a new AI model, offering an advanced version of the tool for a $300 monthly subscription.

The DOD contract is set to boost revenue as Xai strives to compete with more established AI firms such as OpenAI, led by Musk’s former ally, Sam Altman. Musk aims to significantly elevate Xai’s profile while leveraging other ventures within his tech empire for its growth. SpaceX’s investment in Xai totals $2 billion, providing a launchpad for startups to leverage X, formerly known as Twitter. Tesla shareholders have a stake in Xai as well.

Xai introduced the “Grok for Government” initiative in a blog post on Monday, detailing plans to develop AI-powered applications for potential use in healthcare, national security, and other public services, in addition to existing products.

“Under the Grok umbrella for government, we provide top-tier AI tools to federal, state, local, and national security clients,” Xai stated in its website announcement. “These clients can expedite American progress with Grok family products, enhancing the efficiency of daily government services and utilizing AI to tackle longstanding challenges in basic science and technology.”

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Musk has frequently voiced concerns that AI chatbots are designed to disseminate “woke” ideologies, while Grok products have promised to “pursue the fullest truth.” The platform has faced repeated controversies for spreading conspiracy theories and falsehoods, including claims of purported “white genocide” in South Africa, a narrative that Musk himself has echoed earlier this year – Echos claims purportedly made by Musk.

Ethics watchdogs, democratic lawmakers, and privacy advocates have raised alarms regarding Musk’s and DOGE’s handling of AI within government settings and the access to sensitive information while integrated with government agencies. Staff at DOGE had previously facilitated the transfer of government data to tailored iterations of Grok’s chatbots, raising concerns over potential breaches of privacy and security legislation. Reuters reported in May.

Source: www.theguardian.com

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