SpaceX warned investors that AI features such as Grok’s “Spicy” and “Unhinged” modes, which allow the chatbot to generate raunchy image or voice responses with fewer safety filters, could expose the company to regulatory scrutiny and reputational damages, according to a filing submitted Wednesday as part of the company’s planned initial public offering.
As of December, SpaceX had set aside $530 million for potential litigation losses, some of which could stem from ongoing complaints filed against its AI unit over sexualized imagery generated by its 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 which sent the rocket maker’s private valuation soaring to over $1 trillion. In the filing, SpaceX repeatedly claims that xAI’s mission is to develop “truth-seeking artificial intelligence.” In practice, that has often meant launching AI features with minimal guardrails. While Grok’s free-wheeling nature is often framed by Musk as a selling point, it has landed xAI in hot water with regulators.
Disclosing potential business risks is a routine and legally required part of IPO filings, and some of the concerns outlined by SpaceX may never materialize. The company is one of a number of chatbot makers that is being scrutinized by regulators as governments grapple with the societal impacts of generative AI tools.
SpaceX disclosed in the filing that it is currently under investigation in the United States and other countries over allegations that Grok was used to create sexualized imagery of apparent minors. The company also noted that it’s the defendant in several ongoing class action lawsuits, and that future “misuse” of its AI products could expose it to more regulatory sanctions, “including loss of access to certain markets, which has occurred in the past.”
Some of SpaceX’s AI products, including Grok’s Spicy and Unhinged modes, are “designed to generate more candid, direct, or less reserved or irreverent outputs,” notes the filing. “Because these modes may be more irreverent and harsher than our standard offerings, they present heightened risks, including reputational harm, the generation of potentially explicit content and misinformation or deceptive outputs, potential nonconsensual or exploitative imagery, intellectual property infringement, or content that could be viewed as exploitative, harmful, harassing, abusive, or discriminatory.”
SpaceX also disclosed to investors that Grok and X have about 550 million combined monthly users as of March 31, according to the filing. Of those, 117 million use Grok’s AI features each 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 significant questions investors will have to wrestle 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 would quickly turn the division profitable. 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.
