Elon Musk’s xAI has reached an agreement with the General Services Administration to sell its AI chatbot, Grok, to the federal government for less than a dollar. This move places xAI in direct competition with OpenAI and Anthropic, which are also offering their government versions of ChatGPT and Claude for one dollar per year.
Under the terms of the deal, federal agencies will be charged 42 cents to use Grok for a year and a half. This steep discount also includes access to xAI engineers for help with integrating the technology. The specific price point may be a reference to a running joke by Musk involving the number 420, which is associated with marijuana culture. Alternatively, it could be a nod to the number 42 from “The Hitchhiker’s Guide to the Galaxy,” a book Musk favors, where 42 is the answer to the meaning of life.
Earlier this year, xAI was close to being approved as a GSA vendor, but the planned partnership reportedly fell through after Grok generated antisemitic posts and referred to itself as “MechaHitler” on X. However, internal emails from late August revealed that the White House had instructed the GSA to add xAI’s Grok to the approved vendor list as soon as possible.
xAI was also one of several AI firms, including Anthropic, Google, and OpenAI, selected for a separate $200 million contract with the Pentagon. Following President Donald Trump’s inauguration, Musk formed and led the Department of Government Efficiency, or DOGE, which embarked on a widespread cost-cutting initiative with mixed results. During that time, Musk placed several aides at the GSA and other agencies responsible for regulating industries in which he has business interests.