It looks like Elon’s on-again, off-again relationship with the Trump Administration is back on once more, going on the latest reports, which suggest that the White House will now consider Elon’s xAI as an approved supplier for future government contracts.
As reported by Wired, the White House has called for xAI to be added to any future AI supply contract considerations, after it was removed from contention back in July due to its Grok chatbot going on unhinged rants about racism, and labeling itself “MechaHitler” among various other controversial comments.
Add to this the fact that Elon has been publicly battling with President Trump, and it seemed like Musk had burned his bridges on what could have been a valuable funding pathway for his projects.
But now, for some reason, xAI is seemingly back in contention, on contracts that could be worth billions for the business.
Indeed, these could well end up being key to funding Elon’s entire X Corp empire, including X the app, which is still struggling to get its revenue back on track.
The app formerly known as Twitter has seen a significant decline in revenue since Elon Musk took over at the app, to the point where it has seemed like it could go bankrupt at various stages. That’s despite Elon’s massive cost-cutting push, and despite Musk hiring Linda Yaccarino to spearhead the platform’s business efforts. Musk’s re-branding of the app, along with various controversial updates, and his own political stances, have soured a lot of advertiser interest, while X usage is also declining, reducing its broader value as a promotional tool.
Though X’s prospects seemingly got a boost back in March, when xAI acquired X, via an in-house deal between Musk’s companies. That effectively ensures that any funding allocated to xAI can also be shared with Elon’s social media project, and given that xAI has raised over $17 billion in funding, that could provide a valuable lifeline for the app, and ensure that, even without increased advertiser interest, X will remain a viable platform.
So it seemed like X’s prospects were looking up, and that it would remain in business moving forward. But then reports emerged that xAI is also spending more than it has, while its most valuable path to revenue, in supplying AI systems to U.S. government agencies via Elon’s DOGE project, also looked to be cut off, after Musk’s public spat with the president.
But maybe, that’s not the concern that it seemed.
As reported by Wired last week:
“The White House appears to have instructed leaders at the General Services Administration (GSA) to add xAI’s Grok chatbot to a list of approved vendors ‘ASAP,’ according to an email sent by agency leadership earlier this week, which WIRED obtained.”
So despite Elon’s public battles with Trump, and despite Trump repeatedly threatening to cut off Elon from current and future government contracts, it seems that xAI will still have the inside track on future AI supply and support initiatives within U.S. government departments.
Which, again, seemed to be all a part of the bigger picture for Musk’s DOGE project, with the DOGE team looking to build AI elements into government operations, in order to maximize efficiency. Elon’s direct involvement with DOGE, even using his xAI tools on government data internally as part of DOGE audits, would seemingly give xAI a significant advantage in securing future supply contracts, which could then see xAI secure a future funding pathway, long into the foreseeable future.
Which would sure up Elon’s AI project, and in-turn, X.com as well, while also reducing the need for X to play by advertiser rules in how it runs the platform.
It was a smart play to gain more funding for Elon’s expanding empire, and ensure ongoing viability as a key government supplier. But when Elon turned on Trump, that all seemed to go out the window.
Till last week.
I don’t know, it seems like something’s not right, like there’s some other process at play that’s seen the government seemingly allow Musk’s projects to be considered for government deals, despite the public discord between the two men.
Then again, maybe the public show is just that, a show designed to reduce scrutiny on any future government contracts secured by Elon, as it seems like Musk won’t be getting favourable treatment.
Either way, if xAI secures government supply contracts, that’ll solidify its operations, and it’s already signed a deal to supply AI tools to the Defense Department.
So while it did seem like xAI had lost a key pathway due to Musk’s erratic nature, maybe it’s all part of the show.
