Elon Musk’s Grok chatbot melts down – and then wins a military contract

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Hello, and welcome to TechScape. This week, Elon Musk’s X, formerly Twitter, saw its artificial intelligence chatbot Grok go Nazi. Then its CEO resigned. In the past three years of Musk’s ownership of the social network, it feels like X has weathered at least one public crisis per week, more often multiple.

Musk’s chatbot melts down, then wins a military contract

Last week, Musk’s artificial intelligence firm, xAI, saw its flagship chatbot Grok declare itself a super-Nazi, referring to itself as “MechaHitler”. It made racist, sexist and antisemitic posts, which the company deleted.

One example, via my colleague Josh Taylor: Grok referred to a person with a common Jewish surname as someone who was “celebrating the tragic deaths of white kids” in the Texas floods as “future fascists”.

xAI apologized for the bot’s “horrific behavior”. Earlier in the week, Musk himself had handed down a mandate that Grok be less “woke”.

In spite of the meltdown, xAI announced on Monday that it had won a contact of up to $200m with the US Department of Defense along with other major AI developers. The deal is for developing and implementing artificial intelligence tools for the agency.

This contract may be the most blatant example of Musk flexing his newfound connections in government that the public has seen yet. Despite Grok’s flailing and incendiary output, xAI has been rewarded alongside firms that have demonstrated far superior control of their AI products. Other companies in the group of contract winners, which include Google, OpenAI and Anthropic, have demonstrated the viability of their chatbots and implemented robust guardrails against offensive output. All three firms make public commitments to safety testing. Grok, by contrast, has made headlines repeatedly for its controversial and offensive output, as in May when it ranted about “white genocide” in May, echoing Musk’s own talking points. Musk’s most notable comments on his AI’s safeguards have been that they are too restrictive.

My colleague Nick Robins-Early points out that xAI is reaching for revenue and investment anywhere it can get it:

The DoD’s contract will give xAI a boost of revenue as it seeks to compete with more established AI developers like OpenAI, which is led by Musk’s former associate turned rival, Sam Altman. Musk has been heavily promoting xAI and attempting to use other parts of his tech empire to support its future, including having SpaceX invest $2bn into the startup, allowing it to acquire X, formerly, Twitter, and announcing on Sunday that Tesla shareholders will vote on their own investment in xAI.

Chaos is plaguing Musk’s empire

The world’s richest person seems to be growing desperate as a result of the turmoil roiling his kingdom. He has said he will form an independent political party. xAI is pursuing financial Jenga. Tesla’s sales are plummeting; its wobbly Robotaxis are under investigation. SpaceX’s giant rockets keep exploding after liftoff.

Nick Robins-Early again:

Musk has found himself embroiled in controversy outside of X in recent months. His political alliance with Donald Trump, which began during the 2024 campaign and resulted in Musk’s appointment as a special government employee and the creation of the so-called “department of government efficiency”, imploded in June in full public view. The tech tycoon has committed to starting an independent political party.

Meanwhile, Tesla, the source of the majority of Musk’s wealth, has seen its sales fall precipitously in response to his political activities, with prospective buyers and current owners alike shying away from the controversial CEO. SpaceX, Musk’s rocket company, has struggled with its latest rocket, the massive Starship, which has repeatedly exploded after liftoff.

Linda Yaccarino, X’s embarrassed public face, falls off the glass cliff

On Wednesday, X’s CEO, Linda Yaccarino, announced she would step down from her role at the social network. It was the day after Grok went Nazi.

My colleagues Johana Bhuiyan and Nick Robins-Early assessed Yaccarino’s tenure:

In two years, Yaccarino has had to contend with the unpredictability of Musk, ongoing content moderation and hate speech issues on the platform, increasingly strained relationships with advertisers and widespread backlash her boss received for his role in Donald Trump’s administration. Her response in some cases was to remain silent; in others, she chose to defend the company. Through it all, however, experts say it was clear Yaccarino was the chief executive in title only.

Rather than become a destination for mainstream talent, a streaming powerhouse or the “everything app” that Yaccarino promoted, X has largely become a megaphone for Musk to air his grievances, boost and then feud with Trump, and promote his companies. Far-right influencers, porn spambots and meme accounts proliferate, while many media outlets have deprioritized the platform or left it altogether. Misinformation and extremism are rampant, sometimes coming from Musk himself.

When Yaccarino was hired, the Guardian published a story headlined “Linda Yaccarino: does Twitter’s CEO have the most difficult job in tech?”. The article describes the obstacles facing Yaccarino at the start of her tenure, which she never overcame. Two years later, we can say with certainty that she did have the most impossible job in tech: reining in Musk.

My colleague Kari Paul reported in 2023:

Musk promised to bring in a new CEO – a position he himself described as a “painful” job that anyone would be “foolish” to take on.

When Yaccarino was appointed as the company’s first female CEO, there was much talk about her standing on a “glass cliff” – a concept that has emerged through research positing that women are more likely to be promoted to higher positions when companies are in crisis and failure is more likely.

Much of her success, analysts said, would depend on how much Musk was willing to share control. The chaotic nature of the X announcement for some has dashed the hope that Yaccarino can clean up Musk’s mess.

Twitter has been in a downward spiral since Musk took over, grappling with a $13bn debt burden and a massive exodus of advertisers – historically the company’s main source of income. Twitter is looking for new revenue streams, and the “everything app” could be a path to doing so.

“If she’s successful, she goes down in the history books. And if not, she becomes a footnote,” said Jasmine Enberg, social media analyst at the market research firm Insider Intelligence.