Elon Musk's xAI Acquires X for $33 Billion in All-Stock Deal

Elon Musk's artificial intelligence startup, xai, has acquired the social media platform X, formerly known as Twitter, in an all-stock transaction. The deal values X at $33 billion, incorporating $12 billion in debt, and xAI at $80 billion. Musk originally purchased X for around $44 billion in April 2022. The announcement came on March 28, coinciding with a U.S. judge's rejection of Musk's attempt to dismiss a class-action lawsuit related to his acquisition of Twitter. The lawsuit accuses Musk of misleading former Twitter shareholders by delaying the disclosure of his initial stake in the company.

The acquisition has drawn both attention and criticism. Critics argue that the legal stakes have grown with xAI now owning X, exposing the AI firm to legal risk as well. Adam Cochran, a partner at Cinneamhain Ventures, criticized the structure of the deal, alleging that Musk used xAI's inflated valuation to absorb X at an overestimated price while still reporting a significant loss. Cochran suggested that the deal may be a mechanism to transfer user data to xAI.

Musk, however, has positioned the acquisition as a means to accelerate "human progress" by blending xAI's advanced AI capabilities with X's massive reach. He announced the merger, stating, "xAI and X's futures are intertwined… This combination will unlock immense potential." xAI is the creator of Grok, an AI chatbot integrated into X that Musk claims outperforms the original version of ChatGPT on several academic benchmarks. Musk has positioned Grok as a tool designed to assist human progress and support research.

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The $80 billion valuation for xAI has drawn skepticism from some, with Cochran describing it as "an insanely dumb valuation." Others, however, have defended the move, suggesting that Grok may well be a leading model for various AI tasks. The acquisition comes as Musk faces a class-action lawsuit accusing him of misleading former Twitter shareholders. The lawsuit alleges that Musk delayed disclosing his initial stake in the company, which could have affected the share price. With xAI now owning X, the legal stakes have grown, and the lawsuit has become more complex.

This acquisition raises serious questions about Musk's corporate strategy and potential legal implications. The merger of these companies could lead to significant changes in the development of artificial intelligence and social media in the near future. The future of xAI and X are tightly intertwined, and today we are officially taking a step toward combining data, models, computing power, distribution systems and talent. This merger will unlock tremendous potential by combining the advanced artificial intelligence capabilities and expertise of xAI with the massive reach of X. It will allow us to create a platform that doesn't just reflect the world, but actively accelerates human progress.