Elon Musk’s artificial intelligence company, xAI, on Thursday said it had secured a deal with the government that would allow federal agencies to use its chatbot for a nominal fee.
Per the agreement between xAI and the General Services Administration, which handles many of the U.S. government’s vendor contracts, federal agencies will be charged 42 cents in total to use xAI’s chatbot Grok for a year and a half. Agencies that use Grok will receive help from xAI engineers to implement the company’s tools.
“We look forward to continuing to work with President Trump and his team to rapidly deploy A.I. throughout the government for the benefit of the country,” Mr. Musk said in a statement.
Mr. Musk’s xAI has been working to catch up with its competitors in the A.I. race, something he has spent much of his time on recently. The company has been spending billions of dollars on the technology, although it is unclear how much money it is bringing in.
Mr. Musk’s company has struggled to recover from incidences this year when its chatbot went off the rails, including when Grok referred to itself as “MechaHitler” and falsely claimed there was a genocide against white people underway in South Africa, Mr. Musk’s birthplace.
The company was among several A.I. firms selected for Pentagon contracts in July. In August, the federal government announced similar A.I. chatbot deals with OpenAI, which makes ChatGPT, and Anthropic, the maker of Claude. Those two companies are charging agencies a $1 fee for use of their chatbots for a year.
Mr. Musk’s lower price is part of a long-running joke for the billionaire, who has often used variations of 420 during business transactions. The number 420 is a popular marijuana reference and may also refer to “The Hitchhiker’s Guide to the Galaxy,” one of Mr. Musk’s favorite books. In the book, 42 is the ambiguous answer a supercomputer provides when asked to explain the meaning of life and the universe.
After Mr. Trump’s inauguration in January, Mr. Musk immersed himself in a federal cost-cutting effort known as the Department of Government Efficiency. Trusted aides to the billionaire were embedded at the General Services Administration to aid in that effort. Mr. Musk left the project in June and has since focused on his companies.
Negotiations for the xAI deal began in July and Mr. Musk was not directly involved in those conversations, said Josh Gruenbaum, the commissioner of the Federal Acquisition Service, the wing of the General Services Administration that handles procurement.
“We are in a heated race for probably the most important technology ever invented,” he added. “We have a very robust, battle-tested playbook to make sure these are safe use cases, secure use cases, for the federal government.”
Kate Conger is a technology reporter based in San Francisco. She can be reached at [email protected].
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