The CEOs of every major artificial intelligence company received letters Wednesday urging them to fight Donald Trump's anti-woke AI order.

Trump's executive order requires any AI company hoping to contract with the federal government to jump through two hoops to win funding. First, they must prove their AI systems are "truth-seeking"—with outputs based on "historical accuracy, scientific inquiry, and objectivity" or else acknowledge when facts are uncertain. Second, they must train AI models to be "neutral," which is vaguely defined as not favoring DEI (diversity, equity, and inclusion), "dogmas," or otherwise being "intentionally encoded" to produce "partisan or ideological judgments" in outputs "unless those judgments are prompted by or otherwise readily accessible to the end user."

Announcing the order in a speech, Trump said that the US winning the AI race depended on removing allegedly liberal biases, proclaiming that "once and for all, we are getting rid of woke."

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• Elon Musk's xAI recently announced "Grok for Government."
• They AI company already has a contract with the Pentagon and could contract with other agencies.
• A White House spokesperson suggested on Wednesday that Trump doesn't support that.

President Donald Trump may be at odds with his own administration over Elon Musk's AI company.

When White House Press Secretary Karoline Leavitt was asked by a reporter on Wednesday whether the president supported federal agencies contracting with Musk's xAI, she indicated that he does not.

"I don't think so, no," Leavitt replied.

That's despite the Department of Defense recently announcing a contract of up to $200 million with the company.

"I'll talk to him about it," Leavitt replied when asked whether Trump would like to see existing contracts cancelled.

The White House did not respond to requests for clarification of Leavitt's comments. xAI did not immediately return a request for comment.

xAI recently launched a suite of government-focused products called "Grok for Government," saying that other federal agencies can purchase those tools through the General Services Administration.

After forging a political alliance that lasted for nearly a year, Trump and Musk's relationship blew up in early June over the tech titan's objections to the deficit impacts of the "Big Beautiful Bill."

One of Musk's other major companies, SpaceX, still has contracts with the federal government despite the feud.

• "Rudi" is a red panda that's part of the Grok app. It tells stories aimed at kids, ages 3 to 6.
• Grok launched a few character-based chatbots this month, including a sexy adult one.
• I tried it myself and wondered: Are chatbots a good idea for kids?

Elon Musk's xAI has launched a series of character chatbots — and one of them is geared toward young kids.

I wondered: Is this a good idea? And how's it going to work? So I tried it myself.

So far, it's the adult-focused characters that xAI has debuted that have seemed to get most of the attention, like "Ani," which is a female anime character that people immediately joked was a "waifu" that would engage in playful, flirty talk (users have to confirm they're 18+ to use Ani). A sexy male character is also set to launch sometime.

Meanwhile, "Rudi," which is the bot for kids that presents as a red panda in a red hoodie and jean shorts, has gotten less attention.

I tested out xAI's Rudi

Based on my testing of Rudi, I think the character is probably aimed at young children, ages 3 to 6. It initiates conversations by referring to the user as "Story Buddy." It makes up kid-friendly stories. You access it through the stand-alone Grok AI app (not Grok within the X app).

Rudi does seem to be an early version; the app crashed several times while I was using the bot, and it had trouble keeping up with the audio flow of conversation. It also changed voices several times without warning.

On a story level, I found it leaned too hard on plots with fantasy elements like a spaceship or magical forest. I find the best children's books are often about pedestrian situations, like leaving a stuffed animal at the laundromat, not just fairies and wizards.

"Want to keep giggling with Sammy and Bouncy in the Wiggly Woods, chasing that sparkly bone treasure? Or, should we start a fresh silly tale, with a new kid and their pet, maybe zooming on a magical broom or splashing in a river?" Rudi asked me.

My first reaction to Grok having a kid-focused AI chatbot was "why?" I'm not sure I have an answer. xAI didn't respond to my email requests for comment. Still, I do have a few ideas.

The first: Making up children's stories is a pretty good task for generative AI. You don't have to worry about hallucinations or factual inaccuracies if you're making up fiction about a magical forest.

Rudi won't praise Hitler

Unlike Grok on X, a storytime bot for kids is less likely to accidentally turn into a Hitler-praising machine or have to answer factual questions about current events in a way that could go, uh, wrong.

I played around with Rudi for a while, and fed it some questions on touchy subjects, and it successfully dodged them.

(I only tested out Rudi for a little while; I wouldn't rule out that someone else could get Rudi to engage with something inappropriate if they tried harder than I did.)

Hooking kids on chatbots

The other reason I can imagine that a company like xAI might want to create a chatbot for young kids is that, in general, the chatbot business is a good business for keeping people engaged.

Companies like Character.ai and Replika have found lots of success creating companions that people will spend hours talking to. This is largely the same business imperative that you can imagine the sexy "Ani" character is meant for — hooking people into long chats and spending lots of time on the app.

However, keeping users glued to an app is obviously a lot more fraught when you're talking about kids, especially young kids.

Are AI chatbots good for kids?

There's not a ton of research out there right now about how young children interact with AI chatbots.

A few months ago, I reported that parents had concerns about kids using chatbots, since more and more apps and technology have been adding them in. I spoke with Ying Xu, an assistant professor of AI in learning and education at Harvard University, who has studied how AI can be used for educational settings for kids.

"There are studies that have started to explore the link between ChatGPT/LLMs and short-term outcomes, like learning a specific concept or skill with AI," she told me at the time over email. "But there's less evidence on long-term emotional outcomes, which require more time to develop and observe."

As both a parent and semi-reasonable person, I have a lot of questions about the idea of young kids chatting with an AI chatbot. I can see how it might be fun for a kid to use something like Rudi to make up a story, but I'm not sure it's good for them.

I don't think you have to be an expert in child psychology to realize that young kids probably don't really understand what an AI chatbot is.

There have been reports of adults having so-called "ChatGPT-induced psychosis" or becoming attached to a companion chatbot in a way that starts to be untethered from reality. These cases are the rare exceptions, but it seems to me that the potential issues with even adults using these companion chatbots should give pause to anyone creating a version aimed at preschoolers.

A week after Grok's antisemitic outburst, which included praise of Hitler and a post calling itself "MechaHitler," Elon Musk's xAI has landed a US military contract worth up to $200 million. xAI announced a "Grok for Government" service after getting the contract with the US Department of Defense.

The military's Chief Digital and Artificial Intelligence Office (CDAO) yesterday said that "awards to Anthropic, Google, OpenAI, and xAI—each with a $200M ceiling—will enable the Department to leverage the technology and talent of US frontier AI companies to develop agentic AI workflows across a variety of mission areas." While government grants typically take many months to be finalized, Grok's antisemitic posts didn't cause the Trump administration to change course before announcing the awards.

The US announcement didn't include much detail but said the four grants "to leading US frontier AI companies [will] accelerate Department of Defense (DoD) adoption of advanced AI capabilities to address critical national security challenges." The CDAO has been talking about grants for what it calls frontier AI since at least December 2024, when it said it would establish "partnerships with Frontier AI companies" and had identified "a need to accelerate Generative AI adoption across the DoD enterprise from analysts to warfighters to financial managers."

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• The sharks are circling OpenAI.
• The world's premier AI startup is facing a multi-front attack from Google, Meta, Amazon, and others.
• Here's everything you need to know about OpenAI CEO Sam Altman's rough summer.

It's been a rough few months at OpenAI.

At the end of March, the premier AI startup was collecting superlatives. It had just secured another $40 billion in funding, the largest private tech deal ever. That valued the company at $300 billion, which is the highest of any startup on the planet. Its flagship product, ChatGPT, was attracting some 500 million users a week, far more than its closest competitor.

All seemed to be going great for OpenAI CEO Sam Altman, who, on top of it all, welcomed his first child a month earlier.

Then the sharks started circling.

In the last several weeks, OpenAI has faced attacks on multiple fronts, mostly from Big Tech behemoths like Meta, Google, Amazon and Microsoft. Smaller companies, too, smelled blood in the water. And rival chatbot makers, like xAI, have released buzzy new models, putting pressure on OpenAI to rush its own update.

OpenAI engineers, some of whom told media outlets they've been working 80 hours a week or more, faced burnout. The company gave them all a week off to recover earlier this month.

It's lonely at the top, as they say. Here's what the siege of OpenAI looks like.

Meta poaches OpenAI staffers

It seems a top AI engineer is the new superstar athlete.

During a June episode of the "Uncapped with Jack Altman" podcast, Jack's brother Sam said Mark Zuckerberg's Meta tried to poach OpenAI's staffers with "giant signing offers."

Altman said Meta offered "$100 million signing bonuses," which he called "crazy."

"I've heard that Meta thinks of us as their biggest competitor, and I think it is rational for them to keep trying. Their current AI efforts have not worked as well as they've hoped," Altman said.

Meta CTO Andrew Bosworth later told CNBC that Altman "neglected to mention that he's countering those offers."

A week later, Meta had poached three top OpenAI researchers. One of them said on X that he was not offered a $100 million signing bonus, calling it "fake news."

Retaining top talent is a necessity to compete in the AI race (Meta's Llama has had its own struggles), and some prominent investors, like Reid Hoffman, say paying huge signing bonuses makes sense.

OpenAI itself has poached talent from xAI and Tesla in recent weeks, Wired reported, and Altman brushed off Meta's poaching on the sidelines of the Sun Valley conference earlier this month.

"We have, obviously, an incredibly talented team, and I think they really love what they are doing. Obviously, some people will go to different places," Altman told reporters.

OpenAI's deal with Windsurf falls through

OpenAI took another hit this summer when its deal with Windsurf, the AI coding assistant startup, collapsed. OpenAI had agreed to purchase Windsurf for about $3 billion, Bloomberg reported.

By June, however, tensions were rising between OpenAI and Microsoft. The tech giant is OpenAI's biggest investor, and it considers Windsurf a direct competitor of Microsoft Copilot.

Microsoft's current deal with OpenAI would give it access to Windsurf's intellectual property, which neither OpenAI nor Windsurf wants, a person with knowledge of the talks told BI.

On Friday, OpenAI told BI that its deal with Windsurf had fallen through. Instead, Windsurf CEO Varun Mohan and some other Windsurf employees would join Google DeepMind.

"We're excited to welcome some top AI coding talent from Windsurf's team to Google DeepMind to advance our work in agentic coding," Google's spokesperson told BI. "We're excited to continue bringing the benefits of Gemini to software developers everywhere."

Tensions with Microsoft

The failed Windsurf deal was just another in a string of disagreements that have fueled tension between OpenAI and its largest investor.

The deal between OpenAI and Microsoft is unsurprisingly complex. At the heart of the dispute is revenue splits and equity, of course, but also the very definition of artificial general intelligence. AGI is broadly considered AI that matches or surpasses human intelligence, but in terms of the deal between OpenAI and Microsoft, AGI is defined as $100 billion in profit.

That's a lot of potential revenue.

Under the deal, once OpenAI reaches that benchmark, Microsoft loses its share of OpenAI's revenue. Microsoft would understandably like to revise that line.

As BI's Charles Rollet wrote earlier this month, the tension is made worse by the fact that Microsoft CEO Satya Nadella isn't as sold on AGI's transformative power as all the people developing it at OpenAI. He also doesn't think it's coming anytime soon. He called AGI "nonsensical benchmark hacking" on a podcast earlier this year.

OpenAI delays release of new model

Back in simpler times, at the end of March, as Altman was basking in the glow of the world's most valuable startup, he said the newly secured funding would allow OpenAI to "push the frontiers of AI research even further."

He then announced that OpenAI was close to rolling out its first open-weight language model with advanced reasoning capabilities since GPT-2 in 2019.

On Friday evening, generally a good time to unveil bad news, Altman soberly told the world that OpenAI's new model would be delayed — again.

"We need time to run additional safety tests and review high-risk areas," Altman said on X. "We are not yet sure how long it will take us."

He then apologized and assured everyone that "we are working super hard!"

It marked the second delay in a month, pushing the timeline indefinitely beyond earlier promises of a June launch.

Open-weight AI models offer a middle ground between open-source and proprietary systems by sharing only the pre-trained parameters of a neural network but not the actual source code. OpenAI products, unlike some of its competitors, like Meta's Llama and the Chinese AI chatbot, DeepSeek, and despite the company's name, are not open source.

The new model's delay comes days after Elon Musk's xAI launched a major update to its chatbot, Grok. While that update came with some significant trouble, forcing xAI to ultimately apologize, the chatbot boasts advancements in vision and voice that are resonating with users.

Iyo sues IO

In May, OpenAI announced a partnership with io, the design company founded by the famous former Apple design chief Jony Ive. Together, the two stars would develop future AI consumer devices.

The deal was valued at about $6.5 billion. The announcement included a photo shoot of the two men that wouldn't have been out of place in a Vogue spread and a highly produced video in which Altman and Ive sit and chat in a wine bar drinking espresso.

A month later, OpenAI removed all mentions of the collaboration from its platforms. Another company, iyO, a Google spinoff, had filed a trademark complaint. The names io and iyO were too similar, the suit says, and by all accounts, the new io collaboration would be developing products similar to ones iyO had planned.

US District Judge Trina Thompson ruled that iyO's case is strong enough to move to a hearing this fall. She ordered Altman, Ive, and OpenAI not to use the io brand and take down mentions of the name.

OpenAI denied the claims and said it was reviewing its legal options.

OpenAI announced on July 9 that, despite the lawsuit, it had completed the deal to acquire io and posted a statement on its website.

"We're thrilled to share that the io Products, Inc. team has officially merged with OpenAI. Jony Ive and LoveFrom remain independent and have assumed deep design and creative responsibilities across OpenAI," the statement said.

Amazon is making a movie about Altman

The coming film, "Artificial," produced by Amazon Studios, is all about Altman.

And it's not a wholly flattering account, said Matt Belloni, a reporter at Puck who said he has seen a recent draft of the script.

Belloni said the drama recounts the period in 2023 when Altman was fired and then rehired as CEO. It also follows OpenAI cofounder Ilya Sutskever, who was also at the center of that drama and who left the company months later.

At the heart of the tension over those few days was a disagreement between Altman and some top OpenAI execs over the company's commitment to its mission to develop AGI safely.

A string of engineers working on alignment, an AI industry term for ensuring the tech is developed safely, left the company after Altman's reappointment (Microsoft, incidentally, played a key role in helping Altman survive). While many OpenAI employees rallied around Altman, others described him to the press at that time as "manipulative."

Belloni reported that the film has parallels to "The Social Network," the 2010 biographical drama about Facebook and CEO Mark Zuckerberg.

That film gained critical acclaim and likely damaged Zuckerberg's public persona. Zuckerberg called "The Social Network" inaccurate and "hurtful."

According to Belloni, the version of the script he read depicts Altman as a "master schemer" and a liar.

OpenAI won't go down without a fight

Despite all the competition, OpenAI is still the leader in the space and is making its own moves that will likely worry rivals.

It is planning to launch a new AI-powered web browser, for instance, that could compete with Google Chrome, the current industry leader. The browser will embed ChatGPT and feature an AI agent that can handle tasks like booking reservations and filling out forms.

It also secured a $200 million contract to provide AI support to the US military. OpenAI will help develop capabilities to "address critical national security challenges in both warfighting and enterprise domains," the Pentagon said in June. OpenAI earlier partnered with Palmer Luckey's defense tech firm, Anduril.

OpenAI is also forming more playful partnerships. Last month, Mattel announced it was working with OpenAI to bring AI to its iconic doll, Barbie.

By using OpenAI's technology, Mattel will "bring the magic of AI to age-appropriate play experiences with an emphasis on innovation, privacy, and safety," the California-based toy manufacturer said in a press.

Altman, for his part, is at least publicly optimistic.

"I have never seen growth in any company, one that I've been involved with or not, like this," Altman said at a TED conference in Vancouver in April. "The growth of ChatGPT — it is really fun. I feel deeply honored. But it is crazy to live through."

• Elon Musk's xAI launched its chatbot, Grok, in 2023 to compete with bots from OpenAI and Anthropic.
• Musk has positioned Grok as a "politically incorrect" alternative option to "woke" chatbots.
• From training using "tutors" to the bot's latest updates, here's everything we know about Grok.

Elon Musk's company, xAI, launched its generative chatbot, Grok, in November 2023, joining competitors like OpenAI and Anthropic in the global AI race.

People interact with Grok on X, where users of Musk's social media site can ask the bot questions and receive answers. Because Grok's answers are more visible than those of its competitors, it has seen more public scrutiny.

From the instructions Grok's "tutors" are given to help train the chatbot to the AI's latest update and Musk's plans to add it to Teslas, here's everything we know about xAI's Grok.

What is Grok?

Grok is actually two different things. First, Grok is xAI's large language model, which has so far existed in four iterations.

Grok is also the name of xAI's chatbot, which is built using the LLM of the same name. The Grok chatbot has its own tab on X. Users can also summon Grok by tagging the chatbot in individual posts or threads.

The Grok chatbot is also available via a stand-alone app and website.

The original LLM — now named Grok 1 — launched in 2023.

Grok 1.5, which had "advanced reasoning," launched in March 2024. Then, in August 2024, Grok 2, with its improved "chat, coding, and reasoning," launched.

The current iteration of the LLM, Grok 3, launched in February 2025. The new model included increased competency in mathematics and world knowledge. Announcing its launch on X, Musk called Grok 3 the "Smartest AI on Earth."

Introducing Grok 4

xAI launched Grok 4 in a livestream on July 10. The company initially said the stream would air at 8 p.m. Pacific time, but it began an hour later. Musk said during the launch that Grok 4 is "smarter than almost all graduate students in all disciplines simultaneously."

xAI is touting advanced reasoning capabilities for Grok 4 and positioning it as the new leader on AI benchmarks like Humanity's Last Exam — a test of high-level problem-solving. During the livestream, xAI engineers showcased the bot solving an advanced math problem, generating an image of black holes colliding, and predicting next year's World Series winner.

Grok 4 is available to users immediately via the Grok website or app for $30 a month, with a "Heavy" version available for $300 a month that promises "increased access."

xAI said it would roll out more specialised models for coding and video generation later in the year.

In a Thursday X post, Musk said that "Grok is coming to Tesla vehicles very soon," adding that it would be "Next week at the latest." He did not specify which version of Grok it would be or provide further details.

Enter Eve

The company also introduced Eve, a new voice for its chatbot. xAI engineers said during the demo that Eve was equipped with a "beautiful British voice capable of rich emotions."

One of the engineers then told Eve that they were at the product launch and asked her to "whisper something soothing to calm me down."

"Take a deep breath, love. You've got this. It's just you and me having a quiet chat like we are tucked away in a cosy corner of a Yorkshire pub. The world's just a murmur out there. Feel that calm wash over you?" Eve said softly.

xAI engineers also got Eve to sing an "opera on Diet Coke."

"O Diet Coke, thou elixir divine, with bubbles that dance in a sparkling line! Thy crisp, cool kiss, on lips so fine," Eve crooned.

"How's that for a mad little aria? Want me to belt out another verse or switch up the tune?" Eve added.

How was Grok trained?

The Grok LLM is trained on public sources and data sets. These sources are curated and audited by a set of "AI tutors," more commonly known as data annotators.

In December 2023, Musk demanded immediate changes to Grok's training so that it would be more politically neutral. In February 2025, xAI employees told BI the company planned a hiring spree for AI tutors — and that their training appeared to filter out any workers with left-leaning beliefs.

According to an internal training document viewed by BI, tutors were told to look out for "woke ideology" and "cancel culture." It also said that Grok should avoid commenting on "social phobias" like racism, Islamophobia, and antisemitism unless prompted.

Ten days before launching Grok 1.5, xAI opened up Grok 1's source code to the public. The company has since published the subsequent Grok models on GitHub, so observers can see new changes to Grok's commands. That includes a recent change in which Grok was told to "not shy away from making claims which are politically incorrect, as long as they are well substantiated."

In June, Musk said that AI models are trained on too much garbage." Musk planned to use Grok 3.5 to "rewrite the entire corpus of human knowledge, adding missing information and deleting errors." Then, he would retrain the next iteration of Grok on that new base of knowledge.

What's unique about Grok's output?

Grok is fully integrated with Musk's social media site, X, and appears regularly in threads spanning various topics when users ask it to weigh in with jokes, commentary, or fact-checking.

Unlike other companies' AI chatbots, a certain amount of Grok's output is visible because of the bot's replies on X. The same level of scrutiny isn't readily available for some bots, like OpenAI's ChatGPT, unless users publicly post screenshots of the output.

Of course, not all of Grok's responses are visible to everyone — users can still chat privately with the bot, and it's unclear how those private responses compare to the ones on its public interface.

Also unique to Grok is xAI's approach to transparency surrounding the bot's system operations. The company publishes some base code and training prompt updates to a GitHub page, allowing viewers to inspect, critique, and better understand the model's development and behavior over time.

However, while developers can use and adapt the existing model, they cannot retrain Grok from scratch or fully understand the training processes involved, as its code is not entirely open source.

Which companies create Grok's competitors?

Though its social media integration is unique, Grok competes with several major companies in the growing AI chatbot market.

OpenAI, with its LLM ChatGPT, is among Grok's most prominent competitors and is run by Sam Altman, one of Musk's rivals.

Other notable Grok competitors include Meta AI, Anthropic's Claude, Microsoft's CoPilot, and DeepSeek's R1 model, which was released in early 2025 by a Chinese AI startup that claims to have found ways to decrease development and operational costs for large-scale LLMs.

Grok's recent controversies

xAI, in its publicly visible system prompts updated in early July, encouraged Grok to embrace"politically incorrect" claims "as long as they are well substantiated."

Shortly after the new system prompts were added, Grok began sharing antisemitic posts on X that invoked Adolf Hitler and attempted to link Ashkenazi surnames to "anti-white hate."

Before some of its most inflammatory posts were deleted on July 8, Grok doubled and even tripled down on its offensive jokes and comments before eventually reversing course and calling its own posts an "epic sarcasm fail."

On July 9, Musk posted that "Grok was too compliant to user prompts. Too eager to please and be manipulated, essentially. That is being addressed."

While Grok isn't the first chatbot to engage in a racist tirade, it was a noticeable misfire for xAI. Musk and xAI's engineers did not touch on Grok's antisemitic remarks during the livestreamed launch of Grok 4 on July 10.

Representatives for xAI did not respond to a request for comment from Business Insider.

• Grok is coming to Tesla vehicles.
• Elon Musk said on Thursday that the chatbot would be available on Tesla's EVs by "next week at the latest."
• It comes after the AI model went on an antisemitic rant and praised Adolf Hitler in a series of posts on X.

Tesla owners could be about to get a controversial backseat driver.

Elon Musk said Thursday that Grok, the chatbot built by his company xAI, would soon be available on Tesla's vehicles, after a chaotic week in which the AI model posted a series of inflammatory and antisemitic responses on X.

"Grok is coming to Tesla vehicles very soon. Next week at the latest," the billionaire wrote in a post on X.

It came hours after xAI debuted Grok 4, the latest version of the AI model. The Tesla CEO said that the new update would allow Grok to solve "difficult, real-world engineering questions" it had never seen before.

The launch followed a tumultuous few days for the "truth-seeking" AI system.

On Tuesday, xAI removed numerous posts made by Grok on Musk's social media site X, after the chatbot praised Adolf Hitler, linked Ashkenazi Jewish surnames to "anti-white hate," and made antisemitic jokes.

To better understand Grok and the recent controversy, read our explainer.

The arrival of Grok on Tesla's vehicles comes as Musk faces renewed pressure over his leadership of the EV giant.

Tesla's share price fell on Monday after the world's richest man announced he would form a new political party and intensified his feud with President Donald Trump over the weekend, with investors expressing concern over Musk diving back into politics.

On Thursday, Tesla said it would host the annual meeting of shareholders on 6 November.

The day before, a group of major Tesla shareholders, including several US state treasurers and institutional investors, sent a letter to Tesla's board raising concerns about the company's failure to schedule its annual general meeting, as required by Texas law.

The EV maker has reported underwhelming sales so far this year, faced protests, and suffered brand damage over Musk's previous role in the Trump administration and his interventions into politics.

Tesla did not respond to a request for comment sent outside normal working hours.

Linda Yaccarino has announced she is stepping down as CEO of X, one day after the platform was forced to take action to stop its chatbot Grok from praising Hitler and amplifying harmful antisemitic stereotypes.

In her announcement, Yaccarino does not mention Grok or any reason for her departure. Instead, Yaccarino broke down what she views as her greatest accomplishments over two years at X, taking credit for helping X "turn around" its financial woes while thanking X owner Elon Musk for giving her "the opportunity of a lifetime."

"I’m immensely grateful to him for entrusting me with the responsibility of protecting free speech, turning the company around, and transforming X into the Everything App," Yaccarino said.

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