Thought Leadership
The Twitter successor X is also losing its formal independence in Elon Musk’s empire. The platform will become part of his AI company xAI – and is likely to provide a lot of training material for the software.
Tech billionaire Elon Musk is merging the online platform X into his AI company xAI. The surprising takeover was sealed in a share deal, as Musk announced. He also previously owned the majority of X. As the Twitter successor will now become part of xAI, it should be much easier legally to use all of the online platform’s content to train the artificial intelligence developed by xAI, which goes by the name of Grok.
xAI competes with other AI companies such as the ChatGPT developer OpenAI. Musk wrote that the takeover would combine data, computer infrastructure and employees, among other things. X has 600 million active users, he claimed. The joint company will reach “billions” of users.
Company shake-up with billion-euro valuations
In the transaction, xAI was valued at 80 billion dollars and X at 33 billion dollars, Musk wrote. In the fall of 2022, he paid around 44 billion dollars for the short message service Twitter, on which X is based. In return, he also took out loans worth around twelve billion dollars. This debt would now be deducted from the valuation of X, Musk explained.
As neither company is listed on the stock exchange, they do not have to publish any official announcements about the takeover. The financial service Bloomberg reported, citing an informed person, that the new company is called XAI Holdings and has been attributed a valuation of more than 100 billion dollars.
Musk torpedoed Twitter’s advertising business
After the Twitter takeover, Musk halved the workforce and lifted many restrictions that were intended to protect users of the platform from hate speech and misinformation. Those who shared Musk’s right-wing political views were given more weight on the service. Numerous major advertisers withdrew because they feared that their ads would end up next to hate speech and damage their image.
Musk repeatedly complained that revenue from advertising had halved. The current status is unclear. Musk had several renegade advertisers sued, accusing them of having agreed to boycott the platform.
Last year, Musk became a close confidant of Republican Donald Trump. With his victory in the presidential election, some companies then considered resuming their advertising with X, according to media reports, because they feared retaliation from the new administration. In the meantime, Musk’s role as Trump’s cost-cutter has given him considerable influence within the government. With this tailwind, X was recently able to raise 900 million dollars from investors, according to reports.
Platform for everything under a new roof?
When he renamed Twitter X, Musk announced that the service would become a “platform for everything” – from banking transactions to job exchanges. So far, we have only seen the beginnings of this. It is unclear whether the vision will also be pursued under the umbrella of xAI. No details have been provided as to how Musk’s appointed X CEO Linda Yaccarino will continue.
