xAI lays off 500 as Elon Musk pivots focus to specialist AI tutors
Elon Musk’s xAI has laid off 500 staff from its data annotation team as the company shifts focus to specialist AI tutors to accelerate development of its chatbot, Grok.
- Sep 15, 2025,
- Updated Sep 15, 2025 12:22 PM IST
Elon Musk’s artificial intelligence company, xAI, has laid off around 500 employees from its data annotation team, the group responsible for training its generative AI chatbot, Grok. The move, first reported by Business Insider, was communicated late on Friday evening and underscores a shift in the company’s strategy.
In an email to employees, xAI explained that it was scaling back its generalist AI tutor roles while prioritising specialist AI tutors. “After a thorough review of our Human Data efforts, we’ve decided to accelerate the expansion and prioritisation of our specialist AI tutors, while scaling back our focus on general AI tutor roles,” the company wrote. Staff were informed that their access to internal systems would be revoked immediately, though salaries would be paid until the end of their contracts or by 30 November at the latest.
Data annotators, often referred to as AI tutors, have been central to Grok’s development. Their work involves classifying information, providing examples, and evaluating responses so the chatbot can improve over time. While these roles were often described as the “backbone” of Grok, xAI now says it plans to expand specialist AI tutor positions tenfold, hiring across areas such as video games, web design, medicine, data science, and STEM.
The layoffs follow reports that Slack accounts of several senior members of the annotation team were deactivated before the official announcement. Some of those affected had backgrounds in Musk’s other ventures, including Tesla’s Autopilot division.
The restructuring also comes shortly after leadership changes at xAI. In July, the company’s chief financial officer, Mike Liberatore, departed after just a few months in the role, reflecting a pattern of turnover often seen across Musk-led firms during periods of strategic change.
Musk launched xAI in 2023 as a rival to OpenAI, Google and Anthropic, positioning it as a challenger to what he has described as Silicon Valley’s “excessive censorship and lax safety standards”. Its headline product, Grok, is known for its irreverent and sometimes abrasive personality, which has gained attention on social media.
Despite the job cuts, Musk has continued to promote Grok’s capabilities. Earlier this month, he highlighted the chatbot’s predictive abilities, encouraging users to test it on a live benchmark platform called FutureX, which scores large language models on how accurately they forecast real-world events across politics, economics, sport and cultural trends.
The changes mark another significant step in xAI’s evolution, as the company reduces reliance on generalist annotators and seeks to refine Grok through domain-specific expertise. However, the scale of the layoffs raises questions about how the company will balance growth ambitions with organisational stability.
For Unparalleled coverage of India's Businesses and Economy – Subscribe to Business Today Magazine
Elon Musk’s artificial intelligence company, xAI, has laid off around 500 employees from its data annotation team, the group responsible for training its generative AI chatbot, Grok. The move, first reported by Business Insider, was communicated late on Friday evening and underscores a shift in the company’s strategy.
In an email to employees, xAI explained that it was scaling back its generalist AI tutor roles while prioritising specialist AI tutors. “After a thorough review of our Human Data efforts, we’ve decided to accelerate the expansion and prioritisation of our specialist AI tutors, while scaling back our focus on general AI tutor roles,” the company wrote. Staff were informed that their access to internal systems would be revoked immediately, though salaries would be paid until the end of their contracts or by 30 November at the latest.
Data annotators, often referred to as AI tutors, have been central to Grok’s development. Their work involves classifying information, providing examples, and evaluating responses so the chatbot can improve over time. While these roles were often described as the “backbone” of Grok, xAI now says it plans to expand specialist AI tutor positions tenfold, hiring across areas such as video games, web design, medicine, data science, and STEM.
The layoffs follow reports that Slack accounts of several senior members of the annotation team were deactivated before the official announcement. Some of those affected had backgrounds in Musk’s other ventures, including Tesla’s Autopilot division.
The restructuring also comes shortly after leadership changes at xAI. In July, the company’s chief financial officer, Mike Liberatore, departed after just a few months in the role, reflecting a pattern of turnover often seen across Musk-led firms during periods of strategic change.
Musk launched xAI in 2023 as a rival to OpenAI, Google and Anthropic, positioning it as a challenger to what he has described as Silicon Valley’s “excessive censorship and lax safety standards”. Its headline product, Grok, is known for its irreverent and sometimes abrasive personality, which has gained attention on social media.
Despite the job cuts, Musk has continued to promote Grok’s capabilities. Earlier this month, he highlighted the chatbot’s predictive abilities, encouraging users to test it on a live benchmark platform called FutureX, which scores large language models on how accurately they forecast real-world events across politics, economics, sport and cultural trends.
The changes mark another significant step in xAI’s evolution, as the company reduces reliance on generalist annotators and seeks to refine Grok through domain-specific expertise. However, the scale of the layoffs raises questions about how the company will balance growth ambitions with organisational stability.
For Unparalleled coverage of India's Businesses and Economy – Subscribe to Business Today Magazine