Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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Musk Expands AI Power Amidst Twitter Stake Lawsuit
AI | March 31, 2025
Image: Freepik/8photo
$33B xAI-X Merger Deepens Musk’s Control Amid Fraud Lawsuit
On March 282025, Elon Musk announced on X that xAI was acquiring X in an all-stock deal to merge data, computing power, AI models, distribution and top talent under one roof. xAI after the merger is valued at $80 billion. At the time of the acquisition, X was valued at $33 billion (includes $12.5 billion debt).
In many ways, the two companies are already working together in some respects, as xAI's chatbot Grok already uses posts on X to train its systems, and moving forward will likely become a larger part of an AI-powered platform, especially for paying users.
See: Elon Musk’s “Magic Money” Discovery and What It Means
Musk originally bought Twitter for $44 billion in 2022 but since taking over the platform which is now called X, the company's valuation has dropped in value and lost major advertisers.
Fraud Lawsuit Moves Forward
On the same day the merger was announced, a U.S. judge ruled that a shareholder lawsuit alleging securities fraud against Musk directly can proceed. Plaintiffs said Musk ignored a March 24, 2022 deadline to disclose that he had acquired more than 5% of Twitter’s shares, and waited 11 more days before filing with the SEC that he owned 9.2%. According to plaintiffs, that delay saved Musk more than $200 million while other investors sold at lower prices.
Further, U.S. District Judge Andrew Carter said Musk’s filings and tweets like the one jokingly turning Twitter’s logo into Doge could be intentionally misleading and expose Musk to financial penalties while raising questions about transparency and investor protection in large cap private tech deals, especially when ownership and management overlap.
Political Influence
Elon Musk has also waded big time into U.S. politics and is now a senior adviser to Donald Trump’s administration and tasked to consolidate or shut down parts of the federal government via the Department of Government Efficiency (DOGE), sparking significant backlash against DOGE which has extended to Musk's business ventures. National wide protests known as the 'Tesla Takedown' movement have occur at Tesla dealerships. Tesla's stock price has experienced a huge decline, partly because of the public's dissatisfaction with Musk's political involvement including prominent celebrities and politicians.
See: Trump’s Inauguration Marks New Chapter for Tech Giants
Meanwhile,Musk still runs Tesla, SpaceX, Neuralink, and The Boring Company, all of which rely on public contracts or infrastructure. Musk holds an unprecedented mix of public and private power, raising real concerns about accountability, fairness, and how much influence a person should have over technology and the public's agenda.
Why It Matters
This M&A deal is a new kind of vertical integration where tech, compute power, communication and political influence all fall under one roof. Investors, regulators, and the public must deal with the risks and implications of when the same person builds AI models, trains them on global conversations, distributes them on his own platform, and advises political leaders.
It's not just about scale, it's about the infrastructure of influence itself.
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