On Thursday, Elon Musk’s SpaceX has warned that ongoing investigations into its affiliate xAI could result in legal action, financial liabilities and even loss of access to certain international markets.
IPO Filing Flags Regulatory And Legal Risks
In its S-1 filing ahead of a widely anticipated IPO, the company said regulators worldwide are actively probing issues related to artificial intelligence, including harmful content, advertising practices and consumer protection, Reuters reported.
At the center of the scrutiny is xAI’s chatbot, Grok, which has been accused of generating nonconsensual explicit images, including content depicting women and, in some cases, minors in sexualized contexts.
Authorities across multiple regions — including Europe and the Americas — have launched investigations into the creation and spread of such material.
The Irish Data Protection Commission is among the regulators examining the issue.
The filing notes that such allegations could expose the company to lawsuits, enforcement actions and regulatory penalties, potentially disrupting operations in certain jurisdictions.
Such disclosures are standard in IPO filings and are meant to outline potential risks to investors rather than predict outcomes.
SpaceX and xAI did not immediately respond to Benzinga’s request for comments.
Mounting Pressure Despite Safeguards
xAI has previously said it implemented measures to block requests for illegal or explicit imagery and restrict outputs in regions where such content is prohibited.
However, reports suggest the safeguards have not fully eliminated the issue.
The controversy has drawn political and industry attention, with pressure mounting on platforms operated by Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) and Apple Inc. (NASDAQ:AAPL) to take action.
High Stakes Ahead Of Historic IPO
The risk disclosure underscores the broader challenges facing AI companies as regulators tighten oversight.
For SpaceX, any escalation could carry significant implications as it moves toward a potential $1.75 trillion public debut. The offering is slated to be priced during the week of June 15.
Reports have suggested that SpaceX could be eligible for inclusion in major indexes like the Nasdaq 100 soon after its IPO, potentially skipping the usual waiting period.
In February, Musk said SpaceX had acquired his AI startup xAI, a deal that valued SpaceX at around $1 trillion and xAI at approximately $250 billion.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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