Elon Musk’s xAI Lays Off Hundreds of Data Annotators

Elon Musk’s artificial intelligence startup, xAI, has laid off at least 500 workers from its largest team—the data annotation division that trains the company’s Grok chatbot, according to a report by Business Insider.

500 Data Annotators Laid Off

Employees were notified by email on Friday night that the company was downsizing its team of “generalist AI tutors.” These workers played a key role in teaching Grok to better understand the world by categorising and contextualising raw data.

According to the report, affected staff will remain on payroll until the end of their contracts or until November 30, 2025, but their access to company systems was cut off immediately after the notice.

Leadership Shake-Up at xAI

The layoffs come shortly after xAI’s finance chief, Mike Liberatore, departed in late July after only a few months in the role, The Wall Street Journal reported. His exit adds to growing questions about the company’s leadership stability and future direction.

Musk’s Vision for xAI

Founded in 2023, xAI was launched by Elon Musk to rival Big Tech’s AI leaders, whom Musk has accused of pushing censorship-heavy and unsafe artificial intelligence models. The company’s flagship product, Grok, was designed to offer a more open and “truth-seeking” chatbot alternative.

However, the layoffs indicate that the company may be restructuring operations to cut costs and refocus its AI development strategy.