500 workers axed at Musk’s xAI as Grok chatbot shifts focus

Elon Musk’s artificial intelligence (AI) company xAI fired 500 employees on Friday night through email, cutting one-third of its data annotation team while promising to hire specialists.

The layoffs hit workers who train the company’s Grok chatbot. Employees lost access to company systems immediately after receiving termination notices around dinnertime.

“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,” the company wrote to terminated workers, according to Business Insider.

Workers will receive pay through their contract end dates or November 30. But their computers were locked the moment they got fired.

The data annotation team was xAI’s largest division. These workers teach Grok how to understand the world by sorting and labeling information. Their main Slack channel dropped from 1,500 members on Friday afternoon to just over 1,000 by evening.

XAI announced on X that it plans to “surge our Specialist AI tutor team by 10x.” The company said it’s hiring experts in science, technology, engineering, math, finance, medicine, and safety.

The firings followed a week of employee evaluations. Workers took tests Thursday night covering traditional subjects such as coding and finance. Some tests covered quirky topics like “shitposters and doomscrollers” to improve Grok’s personality.

Diego Pasini, who recently became team leader, told workers they had until Friday morning to complete at least one assessment. Pasini is on leave from undergraduate studies at the University of Pennsylvania’s Wharton School, according to his LinkedIn profile.

One worker complained about the tight deadline on Slack. “Doing this after people have gone home for the day is pretty shady,” the employee wrote. That person’s account was deactivated shortly after, multiple workers told Business Insider.

Senior employees had their Slack accounts shut down days before the mass layoffs, signaling trouble ahead.

The cuts represent a broader trend in AI development. Companies are moving away from workers who handle general tasks toward specialists with deep expertise in specific fields.

XAI launched in 2023 to compete with major tech companies’ AI efforts. Musk has criticized other AI developers for excessive censorship and weak safety standards.

The company recently released Grok 4, which Musk calls the “smartest AI in the world.” XAI also plans to open a new Seattle office.

The layoffs highlight growing tensions between rapid technological advancement and worker stability in the AI sector. While companies rush to build smarter systems, employees face sudden job changes with little warning.