Musk's xAI Signs $200M Deal with Pentagon

Elon Musk's xAI is launching a new government-facing service. Its first client happens to be the largest employer on Earth.

The Department of Defense will pay up to $200 million for "Grok for Government," a new collection of AI products geared toward use by federal, local, and state governments.

The department has also awarded similar contracts to Anthropic, Google, and OpenAI, which launched its own government-facing initiative last month.

"The adoption of AI is transforming the Department's ability to support our warfighters and maintain strategic advantage over our adversaries," Doug Matty, Chief Digital and AI Officer of the Department of Defense, said in a statement.

xAI said its government-facing products would include models designed specifically for national security purposes and eventually for use in classified environments.

The company also said those products would be available for purchase via the General Services Administration, opening the door for other federal agencies to use them.

The announcement comes less than a week after Grok went on an antisemitic rant on X. The company later apologized for the chatbot's "horrific behavior," though workers at the company erupted in anger internally over the incident.