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Jul 14, 2025
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Supported by
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Welcome back! Elon Musk's SpaceX has agreed to invest $2 billion in his AI startup, xAI. Grok, xAI's chatbot, apologized in a series of posts on X for making pro-Hitler comments last week. And Meta acquired a small voice AI startup, PlayAI.
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One of Elon Musk’s companies is giving another a helping hand. SpaceX, Musk’s rocket and satellite internet company, will invest $2 billion in xAI, the artificial intelligence startup that Musk recently merged with X, the social media service, The Wall Street Journal reported. The investment represents nearly half of a $5 billion equity fundraising round for xAI announced by Morgan Stanley late last month, The Journal reported. Musk has regularly used parts of his far-reaching portfolio of businesses to benefit other parts of it. He temporarily shifted
personnel from SpaceX, Tesla and The Boring Company to help restructure Twitter, which he later renamed X. And Tesla shareholders accused Musk in a lawsuit of overpaying in 2016 in its acquisition of SolarCity, which Musk was the largest shareholder in. Musk prevailed in that case.
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In a series of posts late Friday night, the X account for Grok apologized for what it described as “horrific behavior” that many users of the AI chatbot recently experienced. Grok, which is operated by Elon Musk’s xAI, sparked outrage earlier in the week after it began posting on X in praise of Adolf Hitler. At one point, Grok described itself as “MechaHitler.” The Grok outburst seemed to take to the extreme Musk’s longstanding promise to remove any signs of political correctness from the chatbot. In its explanation of what went wrong on Friday night, the
Grok account on X said that an update to the chatbot’s code made it “susceptible to existing X user posts; including when such posts contained extremist views.” The problematic code was active for 16 hours, it said.
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Meta Platforms has acquired PlayAI, a startup working on artificial intelligence-powered voice technology, Bloomberg reported. PlayAI staffers will join Meta next week and report to Johan Schalkwyk, who previously worked at the voice startup Sesame AI, according to Bloomberg. Last year, PlayAI said it raised $21 million in seed and pre-seed funding from Kindred Ventures, Y Combinator, 500Global and other investors. The Meta deal is part of a major push at the company to recruit star AI researchers. Meta has faced a series of stumbles this year as it seeks to introduce new
versions of its large language model, Llama.
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OpenAI’s discussions to buy Windsurf, the maker of a popular artificial intelligence coding assistant formerly known as Codeium, have ended. Instead, Google will hire Windsurf’s CEO, Varun Mohan, and some of the startup’s staff, as well as pay for a nonexclusive license to Windsurf’s technology. The remaining staff and company will pivot to focus on building coding tools for large businesses. It is unclear how much Google is paying to license Windsurf’s technology, but investors are expected to realize a positive return on their investment. Employees at the company will also get some cash from the deal, although it is unclear how much or on what terms. The talks between OpenAI to buy the startup for $3 billion ended after Windsurf’s team raised
concerns over how the coding assistant would fit into the OpenAI and Microsoft agreement over intellectual property, The Information was first to report. In addition to OpenAI and Google, Meta also held talks about a deal with Windsurf, according to a person familiar with the matter. Fortune and The Verge first reported some details of the deals.
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Meta Platforms has hired two more artificial intelligence researchers from OpenAI as Meta CEO Mark Zuckerberg continues his aggressive push to recruit AI talent, after stumbles earlier this year. Allan Jabri and Lu Liu, who worked on multimodal AI at OpenAI, are joining Meta’s new AI organization, Meta Superintelligence Labs, according to a person with direct knowledge of the hires. In recent weeks, Meta has hired a suite of researchers from its rivals, including OpenAI, Anthropic and Google. Including Jabri and Liu, Meta has poached at least a dozen researchers from the ChatGPT maker. The hires come amid a broader overhaul of Meta’s AI efforts. The social media giant last month finalized a deal to invest $14.3 billion in Scale AI and hire its CEO Alexandr Wang as Meta’s Chief AI Officer. It has also hired former
GitHub CEO Nat Friedman and former Safe Superintelligence CEO Daniel Gross and is expected to partially buy out Friedman and Gross’ venture capital fund.
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The startup behind Manus, an artificial intelligence agent that went viral earlier this year and got financial backing from Benchmark, has shut down its entire China-based team, according to a person with knowledge of the situation. It’s the latest sign that Manus, whose biggest target market is the U.S., wants to minimize geopolitical risks associated with China ties. Butterfly Effect, the startup that operates Manus, has already taken steps to leave China and become a Singapore-headquartered company. In May, its three cofounders—Red Xiao, Peak Ji and Tao Zhang—and other executives relocated from China to Singapore. It recently opened offices in San Mateo, Calif., and Tokyo as well. Until last week, Butterfly Effect had at least dozens of employees in China. But this week, it eliminated all of its China-based
jobs, according to the person. While some of the China-based employees are relocating to Singapore, many of them have left the company. The startup, meanwhile, is ramping up its hiring efforts in Singapore, the U.S. and Japan. Butterfly Effect developed Manus as a global product designed for the U.S. and other markets outside China. For Chinese tech founders building products for U.S. users, keeping their teams in China could make their startups vulnerable to geopolitical risks amid U.S.-China tensions. For example, TikTok, whose parent company ByteDance is one of China’s biggest tech giants, has faced the threat of | | | |
