What Elon Musk xAI acquisition of X Twitter really Means

Elon Musk continues to manipulate his position to benefit his own companies.

Dear Reader,

As you may know, Elon Musk might be favoring contracts for his own companies while revamping the U.S. Government as some kind of a “super auditor” without electoral or congressional support for such a position. Having a tech bro this nestled in the deep state is already disturbing enough but xAI, an artificial intelligence company founded by Elon Musk, is indeed involved in the Department of Government Efficiency (DOGE). The DOGE initiative is part of a broader effort to streamline government operations and reduce spending.

This could be a grave conflict of interest even as boycotts over Elon Musk’s conduct and the Trump Administration’s tariffs are leading to huge declines and boycotts of Tesla products in countries like China, Canada, Germany and in fact of all the EU and including the state of California, by far Tesla’s biggest and most important state in the U.S.

While X, formerly Twitter is a major spreader of misinformation and PR that has nothing to do with journalism or accountability journalism, in fact perpetuating misinformation as true, it seems Elon Musk continues to warp the MAGA reality for his own commercial gains. Meanwhile the U.S. administration itself, has expressed increasing concern regarding misinformation, particularly in relation to significant corporations like Tesla. Apparently, actions are being considered or implemented focus on holding individuals accountable for spreading false information that can harm companies and public perception. The echoes of fascism here are not lost on many of us watching from the sidelines. But, wait for it….🥁 (drum roll):

Elon Musk said on Friday that he’s combining two of his companies, xAI and X, into a single entity, likely avoiding taxes himself and creating legal loopholes around two of the entities he runs.

Clear Antitrust Violation by Elon Musk

In a post on X, Musk said xAI is the acquirer, valued at $80 billion in the deal, while X is valued at $30 billion.

I’ve never personally seen such a lack of rule of law, corporate disruption of Government or fraudulent conduct like we are witnessing today occurring in the U.S. around abuses of power, such as we are seeing with Elon Musk and his relationship with the Trump Administration.

Musk acquired Twitter for $44 billion in 2022, and later changed the name to X. It’s totally insane to say the company is worth $33 Billion today.

Musk says this move is ‘blending xAI’s advanced AI capability and expertise with X’s massive reach.‘

While xAI’s products, including its AI chatbot Grok, were tightly integrated into the X platform before this deal, Friday’s acquisition further combines two of Musk’s most high-profile companies into a larger shady entity. But where is the SEC when you need them? The dark state is emerging.

Since Trump’s Liberation Day of tariffs starting April 2nd signals a profound escalation of global trade wars even targeting former U.S. allies like Europe and Canada, protests have emerged against Tesla and might reached an all-time high in Canada and many parts of the EU contributing to sales declines are steep declines for Tesla vehicles sales especially in China and Germany. xAI while having a lot of funding has had a rather poor start to their LLM products and models. xAI’s Grok 3 might have nice Twitter search capabilities but is nothing to write home about.

Debt, Tyranny and Bloated Valuations

None of this makes a lot of sense from a regulatory, anti-trust or business perspective. xAI was founded in March 2023 and has rapidly progressed in the AI space, raising a substantial amount of funds, which totals approximately $16 billion across multiple funding rounds. After its initial funding, it raised $10 billion in a subsequent round that valued the company at $75 billion. The $6 billion raised in its Series C funding round, along with earlier amounts, significantly contributed to a sharp increase in valuation, with estimates suggesting xAI is valued at around $80 billion now. No reasonable explanation has been given on how even Musk’s internal team arrived at such a high valuation.

He added that the merger would, “unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.” The purchase price, he said, was $45 billion less $12 billion in debt.

In an obviously grey area legal hack, according to publications including the Wall Street Journal (WSJ), shares of X and xAI will be exchanged for shares of a new holding company called xAI Holdings Corp.

According to Musk, xAI’s valuation is now even higher, at $80 billion. Though there’s no factual basis for such a valuation as of March, 2025. In the usual backroom dirty dealing of such things, because both companies are privately held and controlled by Musk, the transaction likely amounts to a kind of quasi illegal stock swap, with X investors getting paid out in xAI shares. To say this is highly unusual, would be an understatement.

OpenAI, Anthropic and xAI all have valuations that don’t make much sense in the long-term. Am I to believe that they will all be generational companies? Along with DeepSeek and Alibaba Cloud’s AI unit? Investors valued xAI at around $50 billion in a financing round last year. Bloomberg reported last month that the company was in talks to raise funds at a $75 billion valuation. But it’s becoming clear Elon Musk and Silicon Valley are on a campaign to alter the future of Government contracts themselves to suit their own designs.

This is perhaps the biggest conflict of interest at the intersection of AI and politics we’ve ever seen in the United States. It’s a historical breach of antitrust and anti-competitive behavior as well as a sharp conflict of interest by one of America’s most famous entrepreneurs.

Elon Musk increasingly lives in his own universe 🌈

The deal could also help xAI's ability to train its chatbot known as Grok. There’s no signs that Grok has widespread consumer appeal globally and Elon Musk’s own claims about how many global users X (Twitter) has, should be taken with a grain of salt.

Paying your way to the DOGE Scam

After contributing close to $300 million to help Trump and other Republican candidates and causes in the 2024 campaign, Musk was put in charge of the Department of Government Efficiency (DOGE), which is eliminating government jobs, spending and getting rid of regulations. It’s a role that puts Musk in position to make changes that benefit his various businesses. This is perhaps the biggest conflict of interest at the intersection of AI and politics we’ve ever seen in the United States.

It’s unfortunate that both xAI and X have many shareholders in common, including venture firm Sequoia Capital and mutual fund manager Fidelity, along with other Billionaire friends of Elon Musk. U.S. capitalism with mafia characteristics appears to be on the rise in America with the Trump Administration and MAGA movement.

Musk often swaps talent from one of his companies, to benefit and help his other companies:

Twitter is Official Dead, Again! 🌈

“Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.” - Elon Musk

By the numbers: X is estimated to have around 121 million daily active users, which is notably lower compared to its previous figures prior to rebranding and management changes. This dramatic reduction can be partly attributed to various shifts in user engagement and platform strategy since its acquisition by Elon Musk. His acquisition of Twitter has to be seen as anything but a success. But if you fold that losing bet into xAI, perhaps you can salvage some of the damage to your brand and the abysmal choices you have made.

Twitter was founded in 2011 and in recent years has become a huge megaphone for Elon Musk, and 14 years later, it will be just be a place to farm and harvest data for Elon Musk’s AI ambitions, for real. It’s a grizzly end for the once beloved Twitter platform.

In response to a deal cementing about $11 billion in lost value since the 2022 sale, X CEO Linda Yaccarino posted, “The future could not be brighter.” 🤔 🌈

I don’t know about you, but this sound like fraud and anti-competitive behavior on extraordinary terms and perhaps the downfall of American democracy as we know it. Free market and meritocratic Capitalism has already been dead for quite some time. With institutions like Democracy and capitalism run with very low integrity and weak leadership, young people need to prepare for what comes next for the U.S. and its systems.

There are some shady dealings about to take place. This past week, Grok launched an integration beyond X, joining Telegram. X owner Elon Musk backed Telegram CEO Pavel Durov after his arrest in France last year, and both CEOs have positioned themselves as defenders of free speech. On Twitter, free speech has characteristics of being AI generated and AI slop as well as being very China bot friendly in nature and virality. Not just a coincidence.

This is not the first time the Verge notes, that Elon has orchestrated such an illegal and highly unusual self-interested merger. The arrangement is also a reminder of a previous Musk deal combining two companies he controlled. Tesla Motors “acquired” SolarCity, a company with Musk as its largest individual shareholder and his cousin Lyndon Rive as CEO, for $2.6 billion in 2016 and dropped “Motors” from its name.

While Grok 3 was a fine model, for about a week, the pace of LLM evolution with DeepSeek, Qwen and Google now releasing Gemini 2.5 Pro (Thinking) means xAI isn’t iterating fast enough to be competitive with practically non-existent products that would differentiate it or impact ChatGPT’s lead in B2C users and ChatGPT revenue. There’s no sense that Elon Musk actually knows what he’s doing in AI. Tesla appears to be imploding with his rising unpopularity sky-rocketing and Tesla’s competition have advanced beyond it while appearing to be disrupting it on price as well like BYD.

Both Linda Yaccarino, the CEO of X, and Igor Babuschkin, the cofounder of xAI, immediately posted similar messages on X signaling their support of the acquisition of X by xAI. The consortium of Elon Musk’s battered companies looks like a collection of bad-boy losers and companies that are struggling to keep up with the pace of technological change in the mid 2020s. Elon Musk is 53, and between having children with random women, and entering politics, it appears like his decision making is totally collapsing in various schemes and bets (and fraud) only Billionaires would understand. It’s also for the bigger whole, significantly tarnishing the reputation of the American brand in the process. This will mean Europe and other regions of the world getting harder on American BigTech and U.S. exceptionalism and global expansionism.

The real X-factor Overlord is here

Musk’s ability to make promises that are actually believed by the recipient parties - is getting hilarious bad. Musk had previously claimed X investors would own 25 percent of XAI, but as of January, that had not materialized for X employees with shares in the company. We’ve never really seen deception at this scale by an American entrepreneur before. X is a Town square for bot accounts and AI influencers who behave like bots, and foreign actors who employ bots to hack democracy in other countries. There’s very little value going on here.

The Era of Musk has Begun

The dark patterns of Tycoon Capitalism in the U.S. in 2025 from tariffs and expansionism plans to monopoly deals and getting favors for your own personal companies with the Trump Administration, and Trump’s various tycoon friends, is off the charts. Yet the American population seems to think it’s great. One more step into dystopia, you did it to yourself America.

xAI and X's futures are intertwined and so are those of American consumers, citizens, voters with Elon Musk. Trump’s latest automobile tariffs, conveniently hurt Tesla’s rivals in the U.S. but not Tesla. With Tesla’s stock falling, Musk thought being an x-factor Overlord would be a cool idea.

All hail the Musk-MAGA Reich. The United States might never be the same.