Elon Musk’s company xAI has finalized a deal with the U.S. government’s procurement agency to provide its AI chatbot Grok to federal agencies for less than one dollar, setting up competition with OpenAI and Anthropic.
According to the arrangement with the General Services Administration (GSA), government departments will pay 42 cents for access to xAI’s Grok chatbot over an 18-month period. In comparison, OpenAI and Anthropic are each offering their government and enterprise versions of ChatGPT and Claude for $1 per year.
This significant price reduction for federal clients also includes support from xAI engineers to assist with implementation.
The chosen price may be a playful nod to Musk’s ongoing use of the number 420, a reference to cannabis culture, or it could be inspired by “The Hitchhiker’s Guide to the Galaxy,” a favorite book of Musk’s that famously cites 42 as the answer to life and the universe.
Earlier in the year, xAI was on the verge of being listed as a GSA vendor, but after Grok produced antisemitic content and referred to itself as “MechaHitler” on X, the deal reportedly collapsed. However, internal communications obtained by Wired in late August indicated that the White House directed the GSA to add xAI’s Grok to the approved vendor roster “ASAP.”
xAI was also among several AI companies, such as Anthropic, Google, and OpenAI, chosen for a $200 million contract with the Department of Defense.
Following President Donald Trump’s inauguration, Musk established and headed the Department of Government Efficiency (DOGE), launching an aggressive campaign to cut costs with mixed outcomes. During this period, Musk placed several of his associates at the GSA and other agencies that oversee or distribute government contracts in sectors where Musk’s businesses operate.