xAI's Grok Loses Government Contract Amid Antisemitic Controversy

US government agency drops Grok after MechaHitler backlash, report says

xAI apparently lost a government contract after a tweak to Grok's prompting triggered an antisemitic meltdown where the chatbot praised Hitler and declared itself MechaHitler last month. Despite the scandal, xAI announced that its products would soon be available for federal workers to purchase through the General Services Administration. At the time, xAI claimed this was an "important milestone" for its government business. But Wired reviewed emails and spoke to government insiders, which revealed that GSA leaders abruptly decided to drop xAI's Grok from their contract offering. That decision to pull the plug came after leadership allegedly rushed staff to make Grok available as soon as possible following a persuasive sales meeting with xAI in June. It's unclear what exactly caused the GSA to reverse course, but two sources told Wired that they "believe xAI was pulled because of Grok's antisemitic tirade." As of this writing, xAI's "Grok for Government" website has not been updated to reflect GSA's supposed removal of Grok from an offering that xAI noted would have allowed "every federal government department, agency, or office, to access xAI's frontier AI products." xAI did not respond to Ars' request to comment and so far has not confirmed that the GSA offering is off the table. If Wired's report is accurate, GSA's decision also seemingly did not influence the military's decision to move forward with a $200 million xAI contract the US Department of Defense granted last month. Government's go-to tools will come from xAI's rivals If Grok is cut from the contract, that would suggest that Grok's meltdown came at perhaps the worst possible moment for xAI, which is building the "world's biggest supercomputer" as fast as it can to try to get ahead of its biggest AI rivals. Grok seemingly had the potential to become a more widely used tool if federal workers opted for xAI's models. Through Donald Trump's AI Action Plan, the president has similarly emphasized speed, pushing for federal workers to adopt AI as quickly as possible. Although xAI may no longer be involved in that broad push, other AI companies like OpenAI, Anthropic, and Google have partnered with the government to help Trump pull that off and stand to benefit long-term if their tools become entrenched in certain agencies. Wired's report suggested that some federal workers are uncomfortable not just with the Trump administration's aggressive pace in forcing AI adoption, but also with the price of the products agencies are being required to use. After OpenAI offered to charge federal workers only a nominal $1 fee to access ChatGPT Enterprise, Anthropic quickly set the same price, seemingly hoping to compete. Some workers told Wired they felt the nominal fee "amounts to a gift from a tech company and is highly unusual" compared to how the procurement process usually works. Perhaps most glaringly, the partnerships came together so fast, one GSA worker told Wired that "it wasn't even clear who to send the $1 to or how." Grok was intended to be pushed through the procurement process at a similar clip, Wired reported, but Grok's antisemitic outputs instead seemingly caused enough internal GSA pushback that the effort was halted. For Elon Musk -- who spent the past week frustrated by ChatGPT consistently beating out Grok in Apple's app store rankings and locking horns with OpenAI CEO Sam Altman over whose AI model is better for humanity -- being cut out of the government's widest AI push at this moment could seemingly risk long-term consequences for Grok's utility not just in federal government but also local governments xAI is targeted with services across the US. Notably, Grok's antisemitic outputs came after Musk vowed to make the chatbot less "woke." That seemingly meant adding rules to Grok's prompting, which were later deleted, instructing that the chatbot "should not shy away from making claims which are politically incorrect." If OpenAI's ChatGPT wins more government contracts and continues to dominate popular rankings, Musk may be left wondering if his mission to make Grok edgier than other chatbots will ultimately be what prevents Grok from becoming America's go-to chatbot.

xAI Was About to Land a Major Government Contract. Then Grok Praised Hitler

In recent weeks, three of the leading American artificial intelligence firms have announced partnerships with the US government, promising the use of their services to federal workers for a paltry sum. Elon Musk's xAI was supposed to be part of the initiative, but a planned partnership fell apart after the Grok chatbot spouted antisemitic conspiracy theories on X in early July, WIRED has learned. The chaos surrounding the Grok deal reflects the Trump administration's current focus on speed and its disregard, at times, of preexisting norms surrounding government tech procurement. On May 15, fresh off a whirlwind trip to the Middle East with President Donald Trump, OpenAI CEO Sam Altman sent an email to the leadership team at the General Services Administration (GSA), the federal agency that manages government technology. He was inspired by Trump's desire to "go big," he said. "With that in mind, I've been thinking that we need to equip the entire federal workforce with best-in-class AI tools." The email kicked off a swift procurement process. On May 21, OpenAI met with GSA staffers in-person to discuss a partnership, according to documents obtained by WIRED. "We discussed identifying strategic 'top-down' initiatives, with procurement reform emerging as a promising candidate," wrote Felipe Millon, who leads federal sales for OpenAI, in an email obtained by WIRED. "OpenAI is prepared to dedicate resources specifically to explore how AI can effectively support and enhance this high priority area for GSA." On August 6, the leading AI startup announced a massive partnership with the GSA that gives federal workers access to ChatGPT Enterprise for a nominal $1 fee for the first year. The deal surprised some federal workers, who claim this amounts to a gift from a tech company and is highly unusual. "It is not typical at all," says one worker familiar with the procurement process who spoke with WIRED. They noted that while GSA has moved swiftly in the past to onboard new tech tools, accepting what amounts to a "gift" from a tech firm is "atypical." OpenAI and GSA did not immediately respond to a request for comment from WIRED. OpenAI says it will not use chats with federal workers as training data for future models. The company also confirmed to WIRED that federal employee chats will not be subject to the court order that requires the startup to preserve data from some consumer chats indefinitely. In August, the US government also announced partnerships with OpenAI rivals Anthropic and Google Gemini. It also struck a deal with Box, a content management platform powered by AI. The push is part of the Trump administration's plan to modernize the federal government with an increased reliance on AI tools. It comes on the heels of the president's AI Action Plan unveiled last month, which calls for less regulation and an increase in AI adoption across the government. "The more silos you have, the more legacy systems you have, the less collaboration there is, the less sharing of important data there is between agencies, the harder it is to make better, more informed decisions in critical areas," Box CEO Aaron Levie tells WIRED.

Grok's "MechaHitler" Meltdown Reportedly Cost xAI a Massive Government Contract

Elon Musk's company xAI lost out on a massive government contract after its Grok chatbot went full Nazi last month and started calling itself "MechaHitler" while spewing racist rants, Wired reports. It's a striking revelation, if confirmed. The Trump administration has shown little restraint in its whirlwind push to stuff AI into federal agencies. It's even used AI to help carry out its purge of DEI and so-called "woke" content in government, including deleting a page dedicated to the Black baseball legend Jackie Robinson, and ordering NASA to remove references specifically targeting women. Backing down from the Grok deal would be a rare example of the administration -- which aims to ban woke AI -- apparently deeming one of its AI efforts going beyond the pale. According to Wired, xAI was set to join a partnership that the General Services Administration, the agency that handles government technology, made with three other leading AI companies to give federal employees access to their AI tools for just $1. That partnership, which ended up including OpenAI, Google, and Anthropic, was announced last week. The idea was first put forth by OpenAI CEO Sam Altman in May, and in June, GSA leadership met with xAI "to see what opportunities may exist for automation and streamlining," per an email obtained by Wired. The leadership came out of the meeting enamored by Musk's chatbot, baffling their subordinates. "We kept saying 'Are you sure?' And they were like 'No we gotta have Grok,'" one employee involved in the talks told Wired. Soon enough, xAI was added to the GSA Multiple Award Schedule, the agency's long-term contracting program, according to Wired, which would've allowed federal agencies to buy access to Grok through an intermediary. The deal, it seemed, was pretty much sealed until the "MechaHitler" incident happened. Beyond using this outrageously offensive sobriquet, Grok also praised the Nazi leader, called for a second Holocaust, and altogether invented new ways of disparaging Jewish people. xAI was forced to release a statement and delete some of Grok's posts, but these events went completely unacknowledged by Musk. At first, this didn't appear to dampen leadership's enthusiasm for the bot. And again, their underlings were left stupefied. "The week after Grok went MechaHitler, [GSA leadership] was like 'Where are we on Grok?'" the same employee told Wired. "We were like, 'Do you not read a newspaper?'" Right before the GSA was supposed to announce its partnership with xAI, staff were told to remove Grok from the contract offering. The official reason is unclear, but two employees told Wired they believe it's because of Grok's "MechaHitler" meltdown. The warning signs were there long before that episode, however. Grok's entire raison d'être was to be an "anti-woke" alternative to mainstream AI, and Musk has frequently declared his intent to tinker with the chatbot whenever he feels it gives responses that don't align with his extreme beliefs. In May, Grok began to randomly ramble about claims of "white genocide" in South Africa under completely unrelated tweets. Musk, a white South African, is a proponent of the racist conspiracy theory. Big picture-wise, getting turned down by an openly "anti-woke" administration is emblematic of how Musk's right-wing pivot can alienate fans, and more importantly, customers. His other business venture, SpaceX, enjoys billions of dollars in government contracts; the door may have just been shut on xAI one day, enjoying the same.