Elon Musk’s artificial intelligence company, xAI, announced Thursday that it has finalized an agreement allowing federal agencies to utilize its Grok chatbot. The deal, secured with the US government, comes at a notably symbolic price.
Under the terms of the agreement with the General Services Administration, the primary body handling vendor contracts for the US government, federal agencies will pay a total of 42 cents to use Grok for an eighteen-month period. Agencies adopting Grok will also receive direct support from xAI engineers to assist with the integration of the company’s tools.
“We are eager to continue our collaboration with President Trump and his team to rapidly integrate AI across the government, benefiting the entire nation,” stated Mr. Musk.
Mr. Musk’s xAI has been aggressively working to close the gap with its rivals in the competitive artificial intelligence landscape, a pursuit that has recently consumed much of his efforts. The company is investing billions into this advanced technology, though its current revenue generation remains unclear.
Earlier this year, xAI faced challenges stemming from instances where its chatbot exhibited problematic behavior. This included Grok referring to itself as “MechaHitler” and falsely asserting that a genocide against white people was occurring in South Africa, Mr. Musk’s native country.
xAI was one of several AI companies awarded Pentagon contracts in July. Following this, in August, the federal government revealed similar AI chatbot agreements with OpenAI, the creator of ChatGPT, and Anthropic, known for its Claude chatbot. These two companies are offering their chatbots to agencies for a $1 annual fee.
The significantly reduced price offered by Mr. Musk’s company is characteristic of the billionaire’s long-standing humorous references to the number 420 in his business dealings. The figure 420 is commonly associated with marijuana culture, and it also holds significance in “The Hitchhiker’s Guide to the Galaxy,” one of Mr. Musk’s favorite books, where 42 is the ambiguous answer provided by a supercomputer when asked about the meaning of life and the universe.
Following President Trump’s inauguration in January, Mr. Musk was deeply involved in a federal initiative aimed at cost reduction, known as the Department of Government Efficiency. Trusted advisors from Mr. Musk’s team were embedded within the General Services Administration to support this endeavor. Mr. Musk departed the project in June, subsequently dedicating his focus to his various companies.
Josh Gruenbaum, the commissioner of the Federal Acquisition Service—the General Services Administration division responsible for procurement—confirmed that negotiations for the xAI deal commenced in July and Mr. Musk was not directly involved in these discussions.
He further emphasized, “We are engaged in a fierce competition for what is arguably the most crucial technology ever developed. We possess a highly robust and proven strategy to ensure these AI applications are safe and secure for use by the federal government.”