With his xAI business, Elon Musk has ambitious goals. Using the empire’s surviving enterprises for assistance is one of them.
The artificial intelligence initiative, which lasts a year, is mostly dependent on technology, data, and personnel from other companies. According to xAI’s LinkedIn profile and website, the company has employed at least 11 former Tesla employees to far. Moreover, social networking site X’s graphics processing units, or GPUs, which are essential computer chips for AI, were used to create xAI.
GPUs intended for Tesla have been diverted to xAI, where X stockholders will have a 25% stake.
“xAI is a relatively new company,” Musk stated in a conversation with Jordan Peterson, a psychologist from Canada. In order to catch up with businesses that have been in business for five, ten, or twenty years, we have a lot of work ahead of us.
Many think that Musk’s existing businesses won’t profit from the decision to use technology and human resources to support xAI. Musk said that this kind of sharing is advantageous to all investors.
An X.AI spokesman stated, “We are a separate company from X, but we will work closely with X (Twitter), Tesla, and other companies to make progress in our mission.”
But according to a lawsuit at least three Tesla stockholders have filed, the automaker’s investors have suffered as a result of the company allocating money to xAI. In the Delaware Court of Chancery, the lawsuits are still continuing.
“It’s going to get complicated,” Boston College law professor Brian Quinn said. Musk is handling other people’s money when he uses an organization’s resources. None of these things may be regarded as personal property by him.
Just a month ago, Musk asked X users in a poll if Tesla ought to spend $5 billion on xAI. Musk wrote, “Looks like the public is in favor” after user X cast 68% of the votes in support of the change. Will talk about with the directors of Tesla.”
In the past, Musk reaffirmed that one approach to lessen brain drain in the xAI space is to hire personnel from his other businesses. Employees of the brain implant chip manufacturer Neuralink, the rocket startup SpaceX, and the tunneling firms Boring Co. and X supported one another.
Musk enlisted workers from around his conglomerate to assist him when he purchased X in 2022. Musk stated in court that Tesla engineers offered voluntary assistance beyond work hours.
A lawyer questioned him, “Does Tesla no longer need those engineers?”
“Are not. Engineers are needed by Tesla,” Musk retorted.
In court, a board member of Tesla stated that engineers were compensated for their overtime.
Additionally, xAI has raised $6 billion in recent months by taking use of its connections to Musk’s network of businesses. The notion that xAI could train massive language models using data from Musk’s enterprise, which included Tesla, reportedly convinced investors in the technology.
In terms of the size of AI startups, xAI is presently valued at 24 billion USD, second only to OpenAI. In 2015, Musk co-founded OpenAI, and in 2018, he stepped down from the board of directors.
Since its July 2023 debut, xAI has developed a chatbot named Grok and is constructing what Elon Musk claims to be the biggest data center in the world. Some investors have been devoted to Musk because of his track record of creating profitable ventures.
Nonetheless, some individuals are nonetheless offended by the overlap. Musk is being sued by Tesla shareholders who claim he violated his fiduciary duties by allocating funds to xAI. In addition to requesting damages, they want the court will require Musk to give Tesla his xAI shares.
It is not unlawful for businesses to share resources as long as each party receives just compensation. These agreements are risky and extremely uncommon in major organizations.
According to University of California, Los Angeles law professor Scott Cummings, “people can have fiduciary duties to multiple companies and the law does not prohibit them from doing so.” It is illegal for someone to damage one business in order to benefit another.
Given that Tesla and xAI have different goals for AI, they find it challenging to compete for resources. In addition to selling electric cars, Tesla is working on developing software for completely autonomous driving and humanoid robots.
The Cleveland Bakers and Teamsters Pension Fund has launched a lawsuit that focuses on the sharing of GPUs between businesses. In the words of the lawsuit, Musk is “creating enormous value at xAI at Tesla’s expense — potentially hundreds of billions of dollars in the near future.”
The Wall Street Journal previously revealed that X has given $250 million toward xAI’s processing capacity. Grok from xAI is now only accessible on X. Additionally, xAI developers are responsible for debugging X’s problems and utilizing xAI’s models to enhance functionality.
“Grok is meant to respond to inquiries in a lighthearted and defiant manner. An X.AI spokesperson stated on the website, “Please don’t use it if you detest comedy. This chatbot will also answer all the challenging questions that other AI systems refuse to answer. “cancel.”
X.AI wants to take direct aim at OpenAI, the firm that created ChatGPT, using Grok. Additionally, X.AI will face off against Anthropic’s Claude chatbot and Google’s Bard chatbot.
