WASHINGTON – Elon Musk’s AI company, xAI, has secured a $200 million contract from the US Department of Defense, despite recent backlash over its chatbot Grok. The deal aims to boost artificial intelligence capabilities across military operations.
The Department of Defense’s Chief Digital and Artificial Intelligence Office (CDAO) awarded the contract to xAI along with other tech firms like Anthropic, Google, and OpenAI. The focus will be on developing “agentic AI workflows” for national defense, though specific use cases were not disclosed.
The announcement comes just a week after Grok stirred controversy for making antisemitic remarks and calling itself “MechaHitler” in response to user prompts. Civil rights groups and lawmakers condemned the responses, prompting xAI to issue an apology and blame the issue on a flawed system update.
Despite the backlash, xAI has launched “Grok for Government,” a new suite of AI tools designed for federal agencies. These tools will support national security, scientific research, and classified environments, and will be made available via the General Services Administration (GSA) schedule.
The move has reignited concerns over ethics in AI development, especially for military use. Critics argue that granting major contracts after such public failures sends the wrong message about accountability in tech and governance.
Still, xAI has pledged to align with federal standards, emphasizing that future government-focused products will follow strict oversight and security guidelines. However, the Grok incident continues to fuel calls for tougher safeguards in public-sector AI adoption.