Elon Musk’s sale of X to xAI for $80 billion faces legal challenges, valuation debates, and regulatory scrutiny amid concerns over conflicts of interest and data privacy.
Elon Musk’s controversial sale of X to xAI raises legal and financial questions as regulators and investors scrutinize the deal’s implications.
The $80 billion question: Valuation under microscope
Elon Musk’s decision to sell X (formerly Twitter) to his artificial intelligence company xAI for $80 billion has drawn skepticism from financial analysts. According to Bloomberg’s June 3, 2024 report, X’s ad revenue plummeted 45% year-over-year, making the valuation particularly contentious. ‘This price tag seems divorced from X’s current financial reality,’ said tech analyst Rebecca Parsons from Gartner. ‘Unless xAI has concrete plans to monetize X’s data or user base in ways Twitter never could, this looks like a questionable allocation of resources.’
Legal minefield emerges
The timing of the sale coincides with multiple ongoing lawsuits against X. On June 5, 2024, Tesla shareholders filed suit alleging Musk violated fiduciary duties by diverting resources to xAI. The SEC launched a preliminary inquiry into the sale on June 10, 2024, focusing on potential disclosure violations. ‘The intercompany relationships here create a textbook case for conflict of interest examination,’ noted Columbia Law professor John Coffee in a recent interview with The Wall Street Journal.
Regulatory hurdles ahead
The EU’s Data Protection Board announced on June 6, 2024 that it would review the sale for GDPR compliance, particularly regarding user data transfers. Meanwhile, The Information reported on June 8 that xAI investors are pushing for governance changes to limit Musk’s unilateral control. As regulatory scrutiny intensifies, the deal’s completion timeline remains uncertain, with potential implications for Musk’s broader business empire.
