Elon Musk's artificial intelligence company xAI has reportedly laid off at least 500 workers from its data annotation team as it shifts focus toward specialist roles aimed at accelerating the development of its Grok chatbot.
Mass Layoffs Hit Largest xAI Team
According to internal emails reviewed by Business Insider, the company told employees on Friday night that it was downsizing its group of generalist AI tutors, who had been responsible for labeling and categorizing data to train Grok.
"After a thorough review of our Human Data efforts, we’ve decided to accelerate the expansion and prioritization of our specialist AI tutors, while scaling back our focus on general AI tutor roles. This strategic pivot will take effect immediately," the message read. "As part of this shift in focus, we no longer need most generalist AI tutor positions and your employment with xAI will conclude."
Workers were informed they would be paid through the end of their contracts or until Nov. 30, but access to company systems was cut off immediately.
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Pivot Toward Specialist Tutors
The layoffs came as xAI announced plans to grow its specialist tutor team by "10X."
"We are hiring across domains like STEM, finance, medicine, safety, and many more. Come join us to help build truth-seeking AGI," the company stated on X, formerly Twitter.
In the days leading up to the cuts, workers were asked to take tests in areas ranging from coding and finance to social media behaviors, with the results meant to determine their roles.
Some employees expressed frustration over the abrupt process, with one annotator calling the timing "pretty shady" before having their Slack account deactivated, said the report, citing screenshots.
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Leadership And Reorganization
The reorganization was overseen by Diego Pasini, a University of Pennsylvania student on leave who joined xAI in January and recently became the team's leader, according to his LinkedIn profile.
Big Funding, Bigger Ambitions
The shakeup follows xAI's $10 billion in new financing disclosed in June, including a $5 billion debt raise and a $5 billion equity investment led by Morgan Stanley.
The funding is aimed at expanding Musk's AI infrastructure through data centers as competition in the industry intensifies.
Earlier this year, xAI acquired Musk's social media platform X, valuing the startup at $80 billion. The company projects more than $13 billion in annual earnings by 2029.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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