Elon Musk’s xAI lays off 500 workers from Grok team amid restructuring

xAi

Elon Musk’s artificial intelligence startup, xAI, has laid off at least 500 employees from its data annotation team, according to a report by Business Insider. The cuts were announced late Friday night through emails sent to staff, leaving hundreds suddenly out of work.

The layoffs hit the company’s largest division — the data annotation team, also known as generalist AI tutors. Their role was crucial: they helped train xAI’s chatbot, Grok, by labeling and categorizing data so the system could better understand the world. For many, the decision came as a shock, especially since xAI is still in its early growth phase.

Employees were told they would continue to be paid until the end of their contracts or through November 30. However, their access to company systems was cut off immediately after the notices went out, the report said.

When asked about the move, xAI pointed to a post on Musk’s social media platform X. In it, the company said it was not slowing down but instead ramping up its focus on specialist AI tutors, planning to expand that team “by 10X.” The message suggested a shift in strategy — moving away from generalist workers toward a smaller, highly skilled group.

The layoffs come during a turbulent period for xAI. Earlier this month, The Wall Street Journal reported that xAI’s finance chief, Mike Liberatore, had left the company after just a few months on the job. His departure raised fresh questions about the stability of Musk’s AI venture.

Musk launched xAI in 2023, positioning it as a rival to Big Tech players like OpenAI, Microsoft, and Google. He has repeatedly criticized those companies for what he calls censorship and weak safety standards in AI development. Grok, xAI’s chatbot, was introduced as a more open alternative, and the company has raised billions to fund its expansion.

For now, though, the sudden job cuts highlight the challenges of balancing rapid growth with financial and operational realities. While Musk insists xAI is only changing gears, for the 500 employees left without jobs, the future looks far less certain.