Billionaire mogul Elon Musk has transferred his social media service X to his AI venture xAI, igniting debate as it aligns with a US judge denying his request to dismiss a lawsuit related to that platform.
The handover of X’s ownership to xAI on March 28 implies that the class-action lawsuit against Musk — accusing him of deceiving previous Twitter shareholders by postponing the announcement of his initial stake in the social media service — has become “a lot more intense,” Cinneamhain Ventures partner Adam Cochran remarked in a post on X on March 28.
Acquisition could expose xAI to greater “risk”
On the very day that Musk announced “xAI has taken ownership of X in an all-stock deal,” a US judge reportedly dismissed Musk’s efforts to dismiss the lawsuit. Cochran commented that it has “opened up his AI organization to risk here as well, and it’s a much larger opportunity.”
Source: Grok
Musk stated the agreement evaluates xAI at $80 billion and X at $33 billion, inclusive of $12 billion in debts from the $45 billion assessment. He initially purchased X, previously known as Twitter, for around $44 billion in April 2022.
“The futures of xAI and X are closely linked. Today, we officially move forward to integrate the data, models, computing power, distribution, and talent,” Musk stated.
Source: Bryan Rosenblatt
“This merger will unleash tremendous potential by merging xAI’s cutting-edge AI capabilities and skills with X’s extensive reach,” he added:
“This will enable us to construct a platform that not only mirrors reality but actively propels human advancement.”
Nevertheless, Cochran asserted that “Musk leveraged his inflated xAI stock to pay significantly above value for X, while still incurring an $11B deficit on the deal.” He stated that Musk is “deceiving xAI stakeholders and X stakeholders” and was positioned to sell user information to xAI.
Related: Elon Musk’s ‘efficiency’ initiative targets SEC — Report
xAI is predominantly known for its AI chatbot “Grok,” which is integrated into the X platform. When Musk introduced it in November 2023, he proclaimed it could surpass OpenAI’s initial iteration of ChatGPT in numerous academic evaluations.
Source: Raoul Pal
Musk clarified at that moment that the impetus behind developing Grok was to establish AI tools capable of aiding humanity by fostering research and innovation.
While Cochran described Grok’s valuation at $80 billion as an “absurdly ridiculous valuation,” crypto developer “Keef” held a contrary view. Keef remarked, “This seems suspicious all around, but considering the circumstances, Grok is arguably the leading model for various tasks.”
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