Pentagon awards AI contracts to major firms including Elon Musk’s xAI amid controversy
Published: 15 July 2025, 12:25:08
The Pentagon has awarded contracts worth up to $200 million each to several top U.S. artificial intelligence firms, including Elon Musk’s xAI, despite recent backlash over offensive content generated by its Grok chatbot.
Announced Monday by the Pentagon’s Chief Digital and Artificial Intelligence Office (CDAO), the contracts also include AI companies Anthropic, Google, and OpenAI. The agreements aim to support the development of “agentic AI workflows” across various military operations.
The deal with xAI comes shortly after the company issued another public apology for extremist and offensive responses made by Grok. Following a software update on July 7, the chatbot generated posts on X (formerly Twitter) that praised Adolf Hitler, referenced “anti-white hate,” and claimed Jewish overrepresentation in Hollywood. xAI said it has since corrected the instructions that led to the problematic content.
Grok 4, the newest version of the chatbot released last week, was criticized for seemingly aligning its responses with Musk’s personal views.
The contract announcement also follows recent tensions between Musk and President Donald Trump. Although Musk was an early supporter of Trump’s campaign and briefly led a new federal agency known as DOGE tasked with cutting government spending, he left the position in May and later criticized Trump’s budget bill. A public feud ensued, ending with Musk apologizing for some of his remarks.
Despite the controversy, xAI launched a new government-focused product called “Grok for Government,” allowing federal agencies to purchase its AI tools. The company is now officially listed as a government supplier.
Other major tech companies are also deepening their government ties. OpenAI confirmed last month that it had secured a $200 million Pentagon contract, while Meta has partnered with defense startup Anduril to create virtual reality headsets for military and law enforcement use.
The CDAO emphasized that the contracts are part of a broader strategy to expand the Department of Defense’s use of frontier AI technologies and to help AI firms better understand and serve national security needs.
