Elon Musk just made a bold move—one that could change the future of AI and social media forever. But was this merger a game-changer or just a power play?

• Musk’s xAI has acquired X in an all-stock deal, valuing X at $33 billion and creating XAI Holdings.

• xAI now controls X’s massive dataset, raising concerns about whether the merger was necessary since Musk already owned both companies.

• Investors shift their stakes to xAI, which saw its valuation jump from $50 billion to $80 billion without new funding, highlighting a trend of AI firms seeking exclusive data sources.

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Musk’s artificial intelligence company, xAI, has been closely linked to X since its launch in 2023. They share investors, office spaces in Palo Alto, and even collaborate on data and AI tools like the chatbot Grok. Given this history, their latest move wasn’t entirely unexpected.

On March 28, xAI officially took ownership of X in an all-stock transaction. This acquisition values the social platform at $33 billion, excluding debt. The newly formed entity, XAI Holdings, is worth over $100 billion, Bloomberg News reported.

This marks the second time in three years that Elon Musk has acquired the platform formerly known as Twitter.

 Elon Musk has officially merged xAI with X, marking a major shift for the social media platform. The announcement came with a promise of new opportunities. “XAI and X’s futures are intertwined,” Musk posted on X. He explained that this merger would combine data, artificial intelligence, and user reach to create something bigger.

For investors, this move brings hope after years of uncertainty. Since Musk’s first takeover, X has struggled to attract advertisers and make money from subscriptions. Fidelity, a key investor, had repeatedly reduced the value of its stake in X by as much as 70%.

Now, X investors own shares in xAI, a growing artificial intelligence company with strong future potential. However, this merger also raises important questions. The biggest one—was this deal even necessary? Many are waiting to see how this new structure will change X’s future.

Is this Deal Important?

The merger between X and xAI has received praise from Musk and other shareholders. They believe both companies will benefit greatly from working together.

One major advantage is the exclusive data xAI now controls. X’s billions of user posts provide a powerful dataset that xAI can use for its AI models. This also means xAI can block competitors from accessing that data, giving it a competitive edge.

On the other hand, X gains something valuable too. It can now distribute xAI’s chatbot, Grok, and other AI products to millions of users. This partnership strengthens both companies in ways that wouldn’t have been possible separately.

The issue with this reasoning is that these so-called benefits were already happening. For over a year, xAI has been using X’s data to train its chatbot, Grok. Musk has also been promoting Grok on X and selling premium versions to users through X’s subscription service.

Since Musk was already in control of both companies, there was never a real risk of X cutting off xAI’s access or partnering with a competitor. That raises the question—was this merger truly necessary, or was it just a formality?

Do We Know the True Worth of X and xAI ?

Elon Musk has placed X’s value at $33 billion, excluding its $12 billion debt. He also states that xAI is now worth $80 billion. However, the structure of this deal is unconventional since he is using one of his companies to acquire another that he already owns.

With both X and xAI represented by Morgan Stanley, Musk had significant influence over the valuation process. This arrangement allowed him to set the numbers as he saw fit, as long as investors did not object.

The fact that xAI bought X for nearly the same price Musk paid in 2022 doesn’t seem like a coincidence. In reality, X investors are just transferring their stakes from one company to another.

What stands out even more is xAI’s sudden rise in value. Before the deal, it was estimated to be worth $50 billion. Now, it’s valued at $80 billion—without any new funding. A source familiar with the situation suggests Musk adjusted the valuation as part of the acquisition.

When asked about the specifics, an X spokesperson declined to comment.

Do we know the person who will run xAI Holdings? 

X CEO Linda Yaccarino was one of the biggest supporters of the deal, calling it a bright future. However, her own future at the company is uncertain.

Musk hasn’t shared any details about the corporate structure of XAI Holdings or who will lead it. He seems like the most likely choice, but it’s unclear if Yaccarino will remain in charge of X. She might continue running it as a separate business unit, but mergers often bring big changes.

For now, it’s a waiting game. How Musk decides to integrate X and xAI will determine what happens next.

After Musk’s controversy, will this change X’s social networking product? 

X CEO Linda Yaccarino was one of the biggest supporters of the deal, calling it a bright future. However, her own future at the company is uncertain.

Musk hasn’t shared any details about the corporate structure of XAI Holdings or who will lead it. He seems like the most likely choice, but it’s unclear if Yaccarino will remain in charge of X. She might continue running it as a separate business unit, but mergers often bring big changes.

For now, it’s a waiting game. How Musk decides to integrate X and xAI will determine what happens next.

Has the social media network acquisition race began already?

Exclusive data has become a valuable asset for AI companies as they work to improve their chatbots and stay ahead of competitors. Reddit has already taken advantage of this by licensing its user content to Google, earning hundreds of millions in the process.

Bloomberg Intelligence analyst Mandeep Singh suggests that other AI firms may take a similar path. Companies like OpenAI, Anthropic, and Perplexity AI could explore acquiring social networks to gain control of unique datasets.

A recent move by Perplexity shows this trend in action. The company proposed a merger with TikTok US as a possible way to keep the ByteDance-owned platform running in the country.

Smaller social media platforms may start looking for partnerships with AI companies to increase their value. Bloomberg Intelligence analyst Mandeep Singh pointed out that xAI’s $80 billion valuation is higher than the combined worth of Snap, Pinterest, and Reddit.

This premium valuation could push more social networks to team up with AI providers, hoping to benefit from the growing demand for proprietary data.

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