Elon Musk Merges xAI and X in $113B All-Stock Deal

Elon Musk’s artificial intelligence startup xAI has acquired social platform X in an all-stock transaction, forming a new umbrella company, xAI Holdings, with a combined valuation of $113 billion.

Musk announced the deal on X (formerly Twitter) on Friday, noting that the transaction values xAI at $80 billion and X at $33 billion—factoring in X’s $12 billion in debt. The acquisition formalizes what was already a close integration between the two ventures and strengthens xAI’s position in the competitive landscape of AI.

“xAI and X’s futures are intertwined,” Musk said in his post. “This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”

What’s Changing

• xAI Holdings Corp. will serve as the parent company for both xAI and X, consolidating Musk’s control over both platforms under a single structure.

• The deal pools critical resources: data, compute, distribution, models, and talent.

• X’s 600 million active users now provide xAI with a proprietary pipeline of real-time user content to fuel AI training and deployment.

xAI, launched by Musk in 2023, has quickly become a serious competitor to OpenAI, Google DeepMind, and Anthropic. The company’s latest model, Grok 3, was released in February and is already integrated into X for premium subscribers.

Strategic Implications

According to TechCrunch, shares of xAI and X will be converted into the new holding company—a move that could help streamline future fundraising. Sources cited by the Wall Street Journal say the combined structure could make capital-raising efforts more efficient and attractive to investors.

By absorbing X into xAI, Musk solidifies access to a vast repository of public user data and social interactions—assets that are increasingly restricted across the web. Platforms like Reddit and major publishers have begun charging for data access or signing exclusive AI training deals. In contrast, Musk now controls a proprietary data stream that can continuously feed and refine xAI’s models without external limitations.

“This merger completely redefines the established relationship between the platforms,” said Angus Allan, senior product manager at CreateFuture. “Previously, Grok was essentially a tool available on X that users could choose to engage with. Now, with xAI taking over and becoming the parent company of the social media platform, that separation disappears entirely,” Allan says.

Privacy Concerns Mount

Critics warn that the merger could deepen privacy concerns, especially in light of recent updates to X’s terms of service. Those changes expanded the company’s rights to use user-generated content—including messages and media—for AI training.

Cybersecurity experts, including Adrianus Warmenhoven of NordVPN, have flagged the potential misuse of images and metadata, while others caution that private messages could eventually be folded into AI datasets.

“X already has access to your messages, and if this integration deepens, that data could theoretically be used to train or inform AI outputs,” said Cheney Hamilton of Bloor Research. “While Musk has suggested that xAI will be privacy conscious, there’s currently no clear policy outlining limits or user protections.”

“While we know public posts and interactions are fair game for training models like Grok, it gets murkier when it comes to private messages. If they’re not being used now, there’s still that open question of could they be, especially if policies quietly change or users aren’t clearly informed,” says Camden Woollven, group head of AI product marketing at GRC International Group.

Users concerned about privacy do have some limited control, says Allan. Under GDPR, European users can object to their data being used for AI training. Globally, X users can opt out of future model training by going to Privacy & Safety > Data Sharing and Personalization > Grok and unchecking the training option.

“However, these settings don’t retroactively remove your data from existing models, meaning your digital history remains in the system,” Allan says.

Chelsea Hopkins, social media manager at Fasthosts, said, “This integration allows for AI-driven features to become more personalized, but it also increases the potential for extensive data collection and use, often without clear opt-out options being available to users.”

What This Means

Musk’s long-term goal of building an “everything app” now appears more tangible, with AI tools like Grok embedded directly into the user experience. At the same time, the merger raises critical questions about transparency, consent, and corporate oversight in the age of generative AI.

As the AI race intensifies, xAI’s access to real-time social data could become one of its most powerful—and controversial—advantages.

Editor’s Note: This article was created by Alicia Shapiro, CMO of AiNews.com, with writing, image, and idea-generation support from ChatGPT, an AI assistant. However, the final perspective and editorial choices are solely Alicia Shapiro’s. Special thanks to ChatGPT for assistance with research and editorial support in crafting this article.