A Reuters investigation has raised new questions about the commercial strength of Elon Musk’s artificial intelligence venture xAI after its chatbot Grok showed limited adoption across the U.S. government. This area is increasingly viewed as a key battleground in the global AI race.
The report, published on May 19, found that Grok appeared in only three of more than 400 documented federal AI use cases reviewed in 2025. By contrast, products from rivals including OpenAI, Anthropic and Alphabet’s Google were far more widely integrated across government agencies and defense-related projects.
The findings matter because Musk and investors have increasingly linked xAI’s future growth potential to broader expectations surrounding SpaceX and its expanding technology ecosystem. Reuters reported that weak federal adoption could undercut part of the AI growth narrative surrounding SpaceX’s long-term valuation prospects.
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According to Reuters, Grok’s role within agencies has largely been confined to limited administrative tasks such as drafting documents and assisting with communications. The report also cited federal employees and contractors who said many agencies preferred AI systems already embedded within existing enterprise software environments.
Reuters quoted one former federal official describing government procurement as “risk averse,” a characterization that helps explain why agencies may lean toward established providers with broader security certifications and deployment histories. That assessment reflects a wider challenge facing newer AI entrants competing for sensitive public sector contracts.
The report noted that xAI secured a Pentagon contract worth up to $200 million earlier this year. However, Reuters said the deal has not yet translated into widespread operational adoption inside Washington. Some officials reportedly raised concerns about authorization procedures and reliability standards linked to Grok deployments in certain departments.
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The competitive gap is especially significant as OpenAI, Anthropic and Google continue expanding their presence in enterprise and government AI markets. Reuters reported that several agencies favored tools already integrated into Microsoft or Google cloud ecosystems, giving established providers a structural advantage.
While Musk’s companies remain influential across aerospace, communications and artificial intelligence, the Reuters findings suggest that government adoption may depend less on public visibility and more on long-term trust, compliance and integration capabilities.
The report underscores how the next phase of the AI race may increasingly be decided not only by model performance, but also by institutional reliability, procurement readiness and security approvals within major government systems.