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Federal Agencies Strike Deal with Elon Musk’s xAI for Grok Chatbot Access

By  |  September 25, 2025
chatbots, emotions, avatars

Elon Musk’s artificial intelligence company xAI has secured a new federal partnership that will make its chatbot Grok available to U.S. government agencies, according to Bloomberg. The General Services Administration (GSA) announced Thursday that the deal is effective immediately and runs through March 2027.

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    Under the agreement, agencies will be able to access Grok models at a cost of $0.42 per organization, significantly undercutting the $1 per year charged by OpenAI for its competing ChatGPT service. Per Bloomberg, the GSA described the arrangement as the most cost-effective and longest-running AI contract established under its ongoing “OneGov Strategy.”

    Launched in April, OneGov is the federal government’s initiative to streamline technology adoption by centralizing procurement and standardizing contract terms. Companies such as Meta, OpenAI, Anthropic, and Google have already partnered with the program, which is designed to reduce duplication across agencies and accelerate the use of emerging technologies.

    The xAI agreement includes not only discounted access but also engineering support to help agencies deploy and integrate Grok. The GSA said the arrangement reflects its goal of building an efficient, accountable government by expanding the availability of advanced AI tools.

    Related: FTC Orders Major Tech Firms to Disclose AI Chatbot Practices

    The move comes as Musk’s startup intensifies competition with other AI leaders, including OpenAI, Meta, and Alphabet. According to Bloomberg, xAI has recently raised more than $10 billion in fresh funding, lifting its valuation to $200 billion—making it one of the most highly valued startups in the world.

    Still, the government’s embrace of Grok has not been without controversy. Some Democratic lawmakers and advocacy groups have voiced concerns that the chatbot could produce inaccurate or biased responses, raising questions about its safety and trustworthiness for official use. These criticisms follow broader political debates about the Trump administration’s push to expand AI adoption across federal agencies.

    Source: Bloomberg