Musk’s xAI raises $6 billion

Elon Musk’s AI startup xAI has completed its Series B funding round, securing $6 billion. Investors included Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal, and Kingdom Holding. According to Musk on X, xAI’s pre-money valuation was $18 billion.

The company reported making “significant strides” in advancing AI. Since starting in July 2023, xAI—a rival to OpenAI—has reached several milestones, including introducing Grok-1.5 with long context capability and Grok-1.5V with image understanding

In the background, Musk is suing OpenAI, the company he co-founded, and its CEO Sam Altman, alleging they abandoned the startup’s original mission to develop AI for the benefit of humanity and not for profit.

Launched in 2015 with a $1 billion commitment from tech magnates like Musk and Reid Hoffman, OpenAI was initially a nonprofit that attracted experts from academia and major tech corporations. However, by early 2018, Musk confided in Altman, sharing concerns that the organization was lagging behind Google. As a potential remedy, Musk considered assuming leadership of OpenAI. Altman and the other co-founders declined Musk’s offer. In response, Musk distanced himself from the organization and withdrew a significant promised contribution. This disagreement culminated in Musk’s exit in February 2018, and the aforementioned lawsuit filed on Feb 29, 2024.

The news coincides with multiple controversies surrounding OpenAI , involving figures such as Scarlett Johansson, Ilya Sutskever, and entities such as the The New York Times.

Johansson disclosed that Altman approached her in September to voice ChatGPT’s text-to-speech product, describing her voice as “comforting,” but she declined. Nine months later, ChatGPT introduced a voice option that closely resembled Johansson’s. Johansson has since hired legal counsel to investigate how OpenAI created the voice, named Sky. In response to user concerns about voice selection, OpenAI announced it would pause the use of Sky, with no clear timeline for its return.

Additionally, two notable departures from OpenAI include co-founder and key figure Ilya Sutskever and senior researcher and safety officer Jan Leike. While Sutskever departed quietly, Leike openly criticized the company, stating that “safety culture and processes have taken a backseat to shiny products.”

The New York Times has sued OpenAI for copyright infringement. Despite this legal battle, OpenAI is actively securing content deals with the Wall Street Journal and the Financial Times.

Switching gears, Microsoft started with a $1 billion investment in OpenAI in 2019 and increased it with another $10 billion in January, totaling $13 billion under unclear terms. Meanwhile, Amazon invested $4 billion in Anthropic. As OpenAI partners with Reddit, xAI leverages public interaction on (formerly Twitter). In 2024, Reddit has about 70 million daily active users globally. In comparison, Twitter (X) has around 245 million daily active users worldwide. These developments highlight the dynamic and competitive landscape of the AI industry.