On Friday, Elon Musk announced that his AI startup, xAI, is acquiring his social media platform, X, in a deal valuing the company, formerly Twitter, at $33 billion. Musk stated, “This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” in a post on his social network. He noted that X has over 600 million users, and its future is “intertwined” with xAI, which was launched two years ago.

Regarding the merger, Musk explained, “Today, we officially take the step to combine the data, models, compute, distribution, and talent.” He added, “This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.”

The merger of the two companies is being carried out through an all-stock deal, valuing xAI at $80 billion and X at $33 billion while accounting for the social media platform’s $12 billion debt. Elon Musk acquired Twitter for $44 billion in late 2022, a deal that included debt financing. It launched xAI the following year, investing billions in high-end Nvidia chips for the venture. In February, xAI introduced the latest version of its chatbot, Grok 3, which Musk hopes will gain traction in a competitive market dominated by ChatGPT and China’s DeepSeek.

Elon Musk has described Grok 3 as "scary smart," highlighting that it has ten times the computing power of its predecessor, which was launched in August last year. Grok 3 is now competing with OpenAI’s ChatGPT, reigniting the rivalry between Musk and Sam Altman, a former collaborator turned competitor.

Musk and Altman were part of the original 11-member team that founded OpenAI in 2015 to respond to Google’s growing influence in artificial intelligence. Musk initially provided funding for the project but left in 2018. However, when OpenAI introduced ChatGPT in 2022, it became a global sensation and catapulted Altman to tech-world fame. Since then, their relationship has grown increasingly strained, marked by conflicts and legal disputes.

The billionaire owner of X, the world's richest person, is a pivotal financial supporter of US President Donald Trump and leads the Department of Government Efficiency, which has been actively reducing the number of government employees. According to industry analysts at Emarketer, X’s ad revenue is expected to rise this year as brands worry about potential backlash from Musk, who has strong political connections if they choose not to advertise on the platform.

"Many advertisers may view spending on X as a cost of doing business in order to mitigate potential legal or financial repercussions," stated  Jasmine Enberg, Emarketer principal analyst.