xAI announces $200m US military deal after Grok chatbot had Nazi meltdown
The week after its Grok chatbot identified itself as “MechaHitler” and generated antisemitic posts, Elon Musk’s xAI firm announced a contract with the US Department of Defense worth nearly $200m,The deal is for developing and implementing artificial intelligence tools for the agency,The DoD on Monday also announced similar contracts with $200m ceilings with several other major US-based artificial intelligence developers, including Google, Anthropic and OpenAI,The agency is partnering with the General Services Administration to make these companies’ AI tools available for use throughout the federal government,“Leveraging commercially available solutions into an integrated capabilities approach will accelerate the use of advanced AI as part of our joint mission-essential tasks in our warfighting domain as well as intelligence, business, and enterprise information systems,” the US chief digital and AI officer Dr Doug Matty said in a statement.
The contracts deepen the US military’s ties with AI developers and are poised to expand the use of artificial intelligence within the US government after Musk’s so-called ‘department of government efficiency’ (Doge) oversaw mass firings of workers throughout federal agencies.Until Musk’s recent falling out with Donald Trump, the xAI founder was de facto leader of Doge as it gutted government agencies and in some cases pushed for departments to use the Grok chatbot.xAI’s contract announcement comes after the company was forced to issue a public apology after Grok posted a string of responses on X last week that included promoting Nazi ideology and rape fantasies.The company claimed that it fixed the issue and subsequently unveiled its latest AI model with a $300 a month subscription for an advanced version of the tool.The DoD’s contract will give xAI a boost of revenue as it seeks to compete with more established AI developers like OpenAI, which is led by Musk’s former associate turned rival, Sam Altman.
Musk has been heavily promoting xAI and attempting to use other parts of his tech empire to support its future, including having SpaceX invest $2bn into the startup, allowing it to acquire X, formerly, Twitter, and announcing on Sunday that Tesla shareholders will vote on their own investment in xAI.xAI announced the deal and the creation of what it calls “Grok For Government” in a post on its website on Monday, detailing that in addition to its publicly available products it would create custom AI-powered applications for potential use in healthcare, national security and other public services.“Under the umbrella of Grok For Government, we will be bringing all of our world-class AI tools to federal, local, state, and national security customers,” xAI said in a statement on its website.“These customers will be able to use the Grok family of products to accelerate America – from making everyday government services faster and more efficient to using AI to address unsolved problems in fundamental science and technology.”Sign up to TechScapeA weekly dive in to how technology is shaping our livesafter newsletter promotionMusk has long complained that AI chatbots are designed to promote “woke” ideology and vowed his Grok product would be “maximally truth seeking”.
It has repeatedly run into controversy over promoting conspiracies and falsehoods, including earlier this year giving unprompted responses that made false claims of “white genocide” taking place in South Africa – echoing claims that Musk has made himself.Ethics watchdogs, Democratic lawmakers and privacy advocates have expressed concerns about how Musk and Doge have implemented AI in government and gained access to sensitive data while embedded at government agencies.Doge staffers previously fed government data into a custom version of Grok’s chatbot in a potential violation of privacy and security laws, Reuters reported in May.
Post Office could hand ownership to staff amid review after Horizon scandal
Ministers are to consider handing over ownership of the Post Office to its operators after the Horizon IT scandal.The Department for Business and Trade (DBT) has published a green paper, starting the first big review of the scandal-plagued organisation in 15 years. The review, which will run until 6 October, follows the publication last week of the first part of the findings from a two-year public inquiry into the Horizon IT scandal.Ministers said part of the review would include looking at the ownership model of the Post Office, which is ultimately controlled by the government, including the possibility of mutualisation or a BBC-style charter model.Ministers have previously met representatives of post office operators to discuss the possibility of handing ownership to the network branch managers who run its 11,665 outlets
Bank of England governor says jobs slowdown could prompt rate cut; European markets fall after Trump tariff threat – as it happened
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.The pound has dropped to a three-week low this morning, after the governor of the Bank of England said it could make larger cuts to interest rates if the jobs market slows quickly.Andrew Bailey told The Times that “slack” was opening up in the UK economy, following the increase to employers’ national insurance contributions. That slack should create downward pressure on inflation.Bailey insisted: “I really do believe the path is downward” for interest rates
English water firm doubles CEO’s pay despite ‘elevated concern’ over finances
A water company serving 3.9 million customers in London and south-east England has doubled the pay of its chief executive despite the regulator saying it had “elevated concern” over its financial situation.Affinity Water said its chief executive, Keith Haslett, received £1.6m for the 2024-25 financial year, up from £709,000 the year before.Bosses’ pay at privately owned water companies has been under intense scrutiny in recent years as the public and politicians expressed increasing anger over leaking infrastructure and sewage spills into rivers
Pound drops after Bank of England says it could cut interest rates more if jobs market slows
The pound dropped to a three-week low after the governor of the Bank of England said it could make bigger cuts to interest rates if the job market slows too quickly.Andrew Bailey said “slack” was opening up in the UK economy, as higher taxes have squeezed employers.He told the Times: “I really do believe the path is downward” for interest rates. The bank rate stands at 4.25%, after four quarter-point cuts in the last year, and the Bank is next scheduled to make another decision on 7 August
Thames Water announces hosepipe ban as dry weather depletes reservoirs
Thames Water has announced a hosepipe ban as a record dry spring and summer has severely reduced water supplies.Households in Gloucestershire, Oxfordshire, Berkshire and Wiltshire will be banned from using hosepipes to wash cars or water gardens from Tuesday 22 July.The ban will affect all OX, GL and SN postcodes, as well as RG4, RG8 and RG9.The recent hot weather has caused a large surge in demand as people water their gardens and keep cool in the heatwave.Nevil Muncaster, strategic water resources director at Thames Water, said he did not “anticipate the situation will improve any time soon”, adding: “We have to take action now
Tax pubs on profit not turnover, urges Greene King boss
The boss of the pub chain Greene King has called for changes to business rates to remedy “unfairness” that he said added to financial pressures on the struggling pubs industry.Nick Mackenzie, Greene King’s chief executive, said the business rates system of property taxes should be changed to a tax on profits.The British pub industry has complained that it is under pressure from a series of increasing costs. The trade body the British Beer and Pub Association (BBPA) said last week it expected pub closures at a rate of more than one a day during 2025, adding to the 350 net closures during 2024. It said business rates were a factor in those closures
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