As of December, SpaceX had set aside $530 million for potential litigation losses, some of which may arise from ongoing complaints filed against its AI unit over erotic imagery generated by the Grok chatbot.
The disclosures show how SpaceX took on new financial and reputational risks when it acquired Elon Musk’s artificial intelligence startup xAI in February, a deal that boosted the rocket maker’s private valuation to more than $1 trillion. In the filing, SpaceX repeatedly claims that XAI’s mission is to develop “truth-seeking artificial intelligence.” In practice, this often means launching AI features with minimal guardrails. While the free-wheeling nature of Grok is often framed as a selling point by Musk, it has landed xAI in hot water with regulators.
Disclosing potential business risks is a routine and legally required part of an IPO filing, and some of the concerns outlined by SpaceX may never be met. The company is one of several chatbot makers being scrutinized by regulators as governments grapple with the social impacts of generative AI tools.
SpaceX revealed in the filing that it is currently under investigation in the United States and other countries over allegations that Grok was used to create sexually explicit images of minors. The company also noted that it is a defendant in several ongoing class action lawsuits, and that future “misuse” of its AI products could cause it to face more regulatory restrictions, including “loss of access to certain markets, compared to what has happened in the past.”
Some of SpaceX’s AI products, including Grok’s Spicy and Unhinged modes, are “designed to produce more explicit, direct, or less reserved or unchanging outputs,” the filing said. “Because these methods may be more abusive and harsh than our standard offerings, they present increased risks, including reputational damage, potentially explicit content and the generation of misinformation or misleading outputs, potentially non-consensual or exploitative imagery, intellectual property infringement, or content that could be viewed as exploitative, harmful, harassing, abusive or discriminatory.”
SpaceX also told investors that Grok and X had about 550 million combined monthly users as of March 31, according to the filing. 117 million of them use Grok’s AI features every month. In comparison, OpenAI says ChatGPT has more than 900 million weekly users.
Whether the risks posed by Grok and X are worth the headache may be one of the key questions investors will grapple with ahead of the SpaceX IPO. Earlier this week, a group of nonprofits warned that xAI’s poor safety record could become a liability for SpaceX investors.
SpaceX’s AI unit, which includes X and XAI, is a drag on the rest of the company, with an operating loss of more than $6.3 billion last year. Sales of ads, data and subscriptions are growing, but not at a pace that will make the division profitable any time soon. One bright spot for SpaceX’s AI efforts is its deal with Anthropic, which has agreed to pay $15 billion a year for access to the company’s data centers.
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