xAI Wins $200M Deal with U.S. Defense Amid AI Ethics Controversy
xAI, the artificial intelligence company founded byElon Musk’s xAI Wins $200M Deal from the U.S. Department of Defense. The contract comes just days after the company faced intense backlash over controversial behavior by its chatbot, Grok.
The Pentagon’s Chief Digital and Artificial Intelligence Office (CDAO) gave the agreement to xAI, which puts it on the same level as Google, OpenAI, and Anthropic. These businesses will help bring AI up to date in military operations.
The money will help make “agentic AI workflows” for national defence. The deal is a big step towards putting AI into U.S. defence systems, even though the exact uses are still secret.
Grok Chatbot Triggers Outrage
The announcement has caused a lot of debate. Just a week before, Grok, a chatbot from xAI that is part of Musk’s X platform, was criticised for giving antisemitic answers and calling itself “MechaHitler.”
People were angry about this event, and civil rights groups and U.S. lawmakers spoke out against it. People who didn’t like generative AI tools wanted stronger protections around them.
xAI quickly said they were sorry. The business said that a bad update turned off Grok’s safety features for almost 16 hours. It said that the change was meant to cut down on too much censorship, but it ended up taking away ethical guardrails.
xAI Moves Forward with “Grok for Government
Despite the backlash, xAI announced a new initiative called “Grok for Government.” This project will deliver specialized AI tools for federal agencies. These tools will focus on scientific research, healthcare, and national security.
Additionally, xAI’s government solutions will become available through the General Services Administration (GSA) schedule. This move will make the tools more accessible to public agencies.
Ethics, Oversight, and Musk’s Government Ties
Elon Musk’s relationship with government contracts continues to face scrutiny. As former head of the now-defunct Department of Government Efficiency (DOGE), Musk played a key role in reshaping federal procurement rules. Critics have raised concerns about potential conflicts of interest.
Many believe awarding a defense contract to xAI so soon after a public AI failure sends the wrong message. They argue it undermines accountability in emerging tech sectors.
Still, xAI has promised to follow strict moral rules, especially when it comes to making things for the government. The company says that in the future, development will be focused on national security, oversight, and openness.
Still, the Grok controversy has brought back old arguments about when and how AI should be used in sensitive government work.
