xAI Curbs Staff Contact With Cursor Ahead of Possible Deal

xAI has reminded its employees ahead of a possible acquisition of artificial intelligence coding startup Cursor that the two companies must continue to operate independently until the acquisition is decided upon by xAI and approved by regulators, Bloomberg reported Monday (May 26).

Legal advice like this is common during acquisitions, and it is required because antitrust laws prohibit merging companies from intermingling their assets or making joint business decisions before a deal is approved by the relevant regulators, according to the report.

In the case of xAI and Cursor, xAI employees have been reminded that any contact with Cursor employees should be limited to the companies’ existing technical partnership that was announced in April, per the report.

The companies announced their partnership on April 21 in separate posts.

Cursor said in a blog post that it partnered with xAI’s parent company SpaceX to accelerate Cursor’s model training efforts.

The company said it did so after releasing its first agentic coding model, Composer, less than six months earlier and then adding increasingly capable models.

“We’ve wanted to push our training efforts much further, but we’ve been bottlenecked by compute,” Cursor said in the post. “With this partnership, our team will leverage xAI’s Colossus infrastructure to dramatically scale up the intelligence of our models.”

It was reported in March that Cursor’s AI assistant helps programmers more efficiently write and debug code and that the company has become one of the fastest-growing startups ever.

SpaceX announced the partnership the same day as Cursor in a post on X, saying the companies are working together to create coding and knowledge work AI.

The company said this collaboration brings together Cursor’s product and distribution to expert software engineers and SpaceX’s Colossus training supercomputer.

“Cursor has also given SpaceX the right to acquire Cursor later this year for $60 billion or pay $10 billion for our work together,” SpaceX said in its post.

PYMNTS reported May 21 that SpaceX’s newly released registration statement for an initial public offering estimated a $28.5 trillion total addressable market, with about 93% tied to AI. The company said the coming AI economy will be won primarily through ownership of infrastructure.

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