Grok, the AI chatbot Elon Musk has promoted as a less filtered alternative to mainstream tools, just became more than a feature on X. It’s now central to the company’s future—because Musk’s artificial intelligence startup, xAI, has acquired X in a stock-based deal valuing the social media platform at $33 billion, including $12 billion in debt.
The transaction folds the Musk-controlled entities together, turning X from Grok’s distribution partner into part of the development apparatus itself. It also gives xAI access to over 600 million monthly active users and an embedded channel for monetization, advertising, and data collection—all key ingredients in Musk’s plan to compete with AI incumbents like OpenAI and Google.
A Merger Built on Debt, Data, and Distribution
X’s financial challenges have been mounting since Musk acquired Twitter in 2022. Since February, X was seeking $44 billion in fresh funding, matching what Musk initially paid for the platform. In an internal email cited in the report, Musk acknowledged the company’s financial struggles back then, saying “Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.”
With lenders offloading $13 billion in acquisition debt at a loss, the merger gives Musk a path to consolidate his efforts under a single structure. He plans to create a new holding company in Texas.In a post on X, Musk described the goal as enabling the value of xAI to be shared with X investors.
xAI, founded in March 2023 and now valued at $80 billion, brings technical resources to the table including Colossus, a GPU-powered supercomputer infrastructure Musk claims could eventually scale to one million Nvidia chips.
Colossus is expected to support model training at a scale that competes with hyperscalers like AWS and Google Cloud.
Grok Becomes the Business
At the center of the merger is Grok, the chatbot developed by xAI. The third version, Grok 3, launched in February and has posted competitive results in AI benchmarks. On the AIME’24 math test, Grok scored 52, outpacing GPT-4o’s 9. In science reasoning (GPQA), it hit 75, ahead of Claude 3.5 and DeepSeek-V3.
But Grok is not only a technical differentiator—it’s now central to the platform’s business model. In mid-February, access to Grok was placed behind X’s Premium+ tier, with the monthly subscription doubling to $40.
Around the same time, X rolled out Grok-powered advertising tools. Brands can use “Prefill with Grok” to auto-generate ad copy and “Analyze Campaign with Grok” for performance insights.
Grok is now also available in the popular Telegram messenger exclusively for Telegram Premium users without additional cost.
Grok’s integration with Telegram—a platform with a history of limited moderation—raises further questions about content oversight. In 2024, Telegram faced legal challenges in France over allegations that it enabled trafficking and child exploitation. While the company has implemented some moderation tools, Grok’s controversial tone could amplify reputational and regulatory risks for both platforms.
The merger with X aims to shore up X’s monetization strategy, but the approach comes with risks. Advertisers have been wary since Musk’s takeover, citing moderation gaps and reputational concerns. X remains under investigation by EU regulators for potential violations of the Digital Services Act—a scrutiny that could be amplified by Grok’s unfiltered responses.
Censorship Prompts and Screaming Voice Modes
Grok’s moderation issues have created more friction. Grok has been causing controversies, such as producing responses that suggest both Trump and Musk deserved the death penalty for their actions and other extreme outputs.
Grok was also caught filtering out answers about misinformation if they involved Musk or Trump.
These controversies coincided with the February 26 launch of Grok’s voice mode. Grok now includes character presets like “Unhinged,” “Sexy,” and “Conspiracy,” allowing the AI to simulate screaming, explicit conversations, and aggressive tones. One widely shared demo showed the bot yelling for 30 seconds before insulting the user and disconnecting. Musk responded to the post with a laughing emoji.
Despite its benchmark scores and bold design choices, Grok has limitations. Its “Deep Search” feature, intended to pull real-time data, has also been found to hallucinate URLs and avoid citing X content unless explicitly prompted.
Grok’s Central Role Comes With Risk
The merger turns Grok into more than just a product—it’s now the unifying force behind Musk’s AI-social media strategy. xAI builds the intelligence, X supplies the user base, and Grok acts as both the differentiator and the monetization engine. But the stakes are high. Every misstep in moderation or model performance now reflects directly on the merged entity’s viability.
As competitors double down on AI safety, brand trust, and enterprise integrations, Musk is placing a different kind of bet—one on expressiveness, fast iteration, and maximum visibility. Whether that strategy will attract loyal users or provoke a fresh wave of regulatory scrutiny remains uncertain.
Last Updated on March 30, 2025 12:37 pm CEST
