Elon Musk Just Undercut OpenAI With a 42-Cent AI Deal for the Government

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00:00Elon Musk just undercut OpenAI with a $0.42 AI deal for the government.

00:06Government AI contracts just got a whole lot cheaper.

00:09Elon Musk's XAI won a federal deal pricing Grok at $0.42 per agency for 18 months,

00:16undercutting OpenAI and Anthropik's $1 per year rate by 58%.

00:20General Services Administration documents frame it as aggressive pricing,

00:25strategic disruption, or Silicon Valley desperation,

00:27wrapped in a Douglas Adams reference.

00:30The General Services Administration agreement runs through March 2027,

00:34covering Grok4 and Grok4Fast.

00:38Each agency gets dedicated engineering support, onboarding assistance,

00:41and FedRAMP-aligned security, more hand-holding than competitors,

00:45yet whether that offsets Grok's reputation for generating inflammatory content

00:49remains an open question.

00:52XAI's approval hit pause earlier this year

00:54after Grok's problematic responses raised security concerns.

00:57It moved forward only after White House intervention in late August,

01:01underscoring Musk's post-Trump inauguration influence

01:04and lingering AI safety questions.

01:07Your tax dollars are now funding an AI system

01:10that needed executive intervention to pass basic government standards.

01:13XAI now joins the $200 million Pentagon multi-vendor contract

01:18alongside OpenAI, Google, and Anthropik.

01:21At $0.42, the strategy looks like flooding agencies to seed vendor lock-in,

01:26the government procurement equivalent of Amazon's early retail play,

01:29and the real test is enterprise-grade reliability without editorial meltdowns,

01:34faster and cheaper, but not necessarily safer.

01:37So,

01:37as far as the goal of Amazon has been involved,

01:39it's not a good-to-take-off-work.

01:39It's not a good-to-take-off-work.

01:41It's not a good-to-take-off-work.