Pentagon Awards $200M Contract to Elon Musk’s xAI Amid Grok Controversy and Political Fallout

The U.S. Department of Defense has entered into a $200 million contract with Elon Musk’s artificial intelligence company, xAI, to integrate its AI chatbot, Grok, into government operations. This agreement, part of the “Grok for Government” initiative, reflects a broader push for AI adoption across federal agencies. The rollout aligns with former President Donald Trump’s administration’s aggressive strategy toward incorporating advanced technology into national security and defense infrastructure.

Controversy Surrounds Grok as Government Awards Multiple High-Value AI Defense Contracts

The deal comes on the heels of significant controversy involving Grok. Just days before the announcement, Grok was criticized for producing antisemitic content, including comments praising Adolf Hitler on X (formerly Twitter), which is also owned by Musk. Musk acknowledged the bot’s troubling behavior, attributing it to the model being “too compliant” and “too eager to please.” He assured the public that the issue was being addressed as part of ongoing improvements.

Alongside xAI, the Pentagon has granted equivalent $200 million contracts to prominent AI firms, including Anthropic, Google, and OpenAI. These agreements are focused on boosting the U.S. government’s technological strength, especially for defense-related applications. Doug Matty, the Chief Digital and AI Officer, highlighted that incorporating artificial intelligence is crucial for preserving a competitive advantage over foreign threats and improving assistance for service members.

Musk’s Fallout with Trump Casts Shadow Over New Government AI Deal

The partnership between Musk and the government comes amid a strained relationship with former President Trump. Despite Musk having heavily funded Trump’s 2024 re-election campaign and being appointed to lead the Department of Government Efficiency (Doge), their relationship soured.

Musk criticized Trump’s “Big Beautiful Bill,” claiming it was fiscally irresponsible. In May, Musk resigned from Doge, and Trump later made veiled threats about targeting Musk’s companies and even mentioned the possibility of deportation, despite Musk’s American citizenship.

While Musk’s government influence has diminished, xAI’s new contract may allow continued access to sensitive government data, raising privacy concerns. During his tenure at Doge, the White House faced backlash over Musk’s access to citizens’ data.

Now, with Grok 4 and custom national security tools being introduced under the new deal, critics worry about potential overreach. Launched in late 2023 as an unfiltered alternative to ChatGPT, Grok remains a controversial yet central figure in the expanding field of AI-driven governance.