Elon Musk’s xAI has reached an agreement with the U.S. government’s purchasing arm to sell its AI chatbot Grok to the federal government for under a dollar, pitting it against OpenAI and Anthropic.
Under the agreement between xAI and the General Services Administration (GSA), federal agencies will be charged 42 cents to use xAI’s chatbot Grok for a year and a half. OpenAI and Anthropic are offering their enterprise and government versions of ChatGPT and Claude, respectively, for $1 for a year.
The steep discount for federal agencies includes access to xAI engineers to help integrate the technology.
The price point is either part of a running joke Musk has of using variations of 420, a marijuana reference, or a nod to one of Musk’s favorite books, “The Hitchhiker’s Guide to the Galaxy,” which references the number 42 as the answer to the meaning of life and the universe.
Earlier this year, xAI had been close to being approved as a GSA vendor, but after Grok began generating antisemitic posts and calling itself “MechaHitler” on X, the planned partnership reportedly fell through. In late August, internal emails obtained by Wired revealed the White House had instructed the GSA to add xAI’s Grok to the approved vendor list “ASAP.”
The company was also one of several AI firms, including Anthropic, Google, and OpenAI, to be selected for a $200 million contract with the Pentagon.
After President Donald Trump’s inauguration, Musk formed and led the Department of Government Efficiency, or DOGE, in a rampant cost-cutting spree that has seen mixed results. During that time, Musk placed several aides at the GSA and other government agencies responsible for regulating or awarding government contracts in industries in which Musk has business.
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