Elon Musk Just Sold Social Media Site X To His Own xAI Artificial Intelligence Company In A $33 Million All-Stock Deal. What Is He Doing?

Billionaire Elon Musk has just sold his social media platform, X, to his AI startup, xAI, in a controversial $33 billion all-stock deal.

The announcement on March 28 coincided with a U.S. judge rejecting Musk’s attempt to dismiss a class-action lawsuit accusing him of defrauding former Twitter shareholders by delaying the disclosure of his initial investment in the platform.

Musk made the announcement of the acquisition on X saying

"The future of XAI and X is closely linked. Today, we officially take the stop to combine the data, models, computers, distribution and talent."

He adds that this combination will unlock immense potential by blending xAI's advanced AI capability and exertise with X's massive reach.

"This will allow us to build a platform that doesn't just reflect the world but actively accelerates human progress."

However, critics like Adam Cochran of Cinneamhain Ventures argue that the deal exposes xAI to increased legal risks and financial losses.

Cochran alleged that Musk inflated xAI’s valuation to overpay for X, resulting in an $11 billion loss while disadvantaging investors in both companies. He also speculated that Musk is screwing over xAI investors, and X investors, and the acquisition might be aimed at monetizing user data from X for xAI’s benefit.

xAI is best known for its AI chatbot Grok, integrated into X and touted as a competitor to OpenAI’s ChatGPT. While some hail Grok as a leading AI model. During the release of Grok, Musk explained that the motivation of building this AI language model was to create AI tools equipped to assist humanity by empowering research and innovation.