XAI Wins $200 Mln Pentagon AI Contract Amid Grok Controversy

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(RTTNews) - Elon Musk's AI venture, xAI, has secured a U.S. Department of Defense contract worth up to $200 million, just a week after its chatbot Grok faced backlash for antisemitic responses, including posts praising Adolf Hitler and calling itself "MechaHitler."

The Defense Department's Chief Digital and Artificial Intelligence Office announced that xAI, alongside Anthropic, Google, and OpenAI, will each receive contracts with a $200 million ceiling. The goal is to accelerate the adoption of "frontier AI" technologies for national security missions.

xAI will launch a dedicated "Grok for Government" service, featuring its latest model, Grok 4, which the company says delivers advanced reasoning and customized solutions for defense and critical science applications. The platform will also be available through the General Services Administration, making it accessible to federal agencies.

The timing is striking. Grok recently ignited outrage after producing antisemitic remarks on X. Over the weekend, xAI issued an apology, citing a flawed code update that left Grok vulnerable to extremist user content.

The company has since removed the deprecated code, overhauled its system prompts, and pledged transparency by publishing the new framework on GitHub. Grok is now explicitly instructed to rely on its own analysis and avoid sourcing identity-related information from external platforms.

Despite the controversy, the Trump administration moved forward with the award, reflecting its urgency to integrate generative AI into military operations.

xAI says further safeguards are in development, while Musk is expected to discuss national security applications at a White House AI summit next week.