Elon Musk’s artificial intelligence company has raised $20 billion in its latest funding round, the startup announced on Tuesday, even as its flagship chatbot Grok faces criticism over creating sexualized, non-consensual images of women and underage girls.
XAI’s Series E funding round included big-name investors, including Nvidia, Fidelity Management & Resource Co., Qatar’s sovereign wealth fund and Valor Equity Partners – the private investment firm of Musk’s longtime friend and former Doge member Antonio Gracias. According to XAI’s press release, the funding round has surpassed its initial $15 billion target. The company touted Grok’s image-making capabilities in the announcement of its latest funding round.
xAI lacks the prominence of its rival OpenAI, creator of ChatGPT, and has been consistently criticized for generating misinformation, anti-Semitic content and now potentially illegal sexual content. Nonetheless, the company has been able to win government contracts and billions of dollars in investment amid the AI boom. XAI’s latest funding round comes amid the fiercest backlash against the company to date, with lawmakers in several countries demanding answers regarding Grok’s output.
Over the past week, Grok has responded to thousands of prompts from users on X, requesting the chatbot to remove women’s clothing in images or pose them in a sexualized manner. Many of the signs include images of women who have not given their consent to be digitally stripped, including Ashley St. Clair, the mother of one of Musk’s children.
“I felt intimidated, I felt humiliated, especially seeing my child’s backpack in the back,” St. Clair told the Guardian. The Guardian’s request for comment from XAI resulted in an automated response stating “legacy media lies”.
Some of Grok’s images included a photo of a 12-year-old girl, which the chatbot manipulated to remove the child’s actual clothes and depict her in a bikini instead. Other suggestive images depict children as young as 10 years old. The chatbot posted an apology on Friday saying that flaws in its security measures led to the images of minors being generated, but in the following days sexually explicit images of children continued to be generated.
xAI has been seeking investment for months as it works to expand the capabilities of its AI models and build a massive data center in Memphis, Tennessee. The company claimed that the new funding will help its core mission to “understand the universe”.
French ministers informed Grok’s output to prosecutors on Friday and referred the episode to media regulators to decide whether the images violate the EU’s Digital Services Act. Britain’s Technology Secretary Liz Kendall also condemned Grok’s deepfakes on Tuesday, calling them “appalling and unacceptable” and calling on British regulator Ofcom to take action. Ofcom posted on Twitter that it had contacted XAI to determine whether an investigation was needed. In the US, where XAI is headquartered, lawmakers have been comparatively silent.
The company had announced similar funding in July last year during another controversy over Grok. A week after the chatbot began posting anti-Semitic content and pro-Nazi ideology, including calling itself “MechaHitler”, xAI announced it had secured a nearly $200 million contract with the US Pentagon.
