Billionaire Elon Musk is experiencing a "heaven-to-hell" moment in business: while announcing the merger of SpaceX with xAI , creating a $1.25 trillion company, he is watching his X platform become the target of a French police investigation for suspected algorithm abuse and fraudulent data collection. Musk will even have to testify in the investigation.
On Monday, February 2nd, the owner of the rocket and satellite manufacturer finalized the largest M&A deal in history. Under the agreement, SpaceX is now valued at US$1 trillion, while the artificial intelligence (AI) startup, creator of the Grok chatbot, was priced at US$250 million.
“SpaceX acquired xAI to form the most ambitious vertically integrated innovation engine on Earth (and in space),” Musk said in a statement released by the companies.
The merger of SpaceX with xAI is the most recent example of Musk integrating his business empire. In 2016, the electric car manufacturer Tesla acquired SolarCity, a company already owned by the billionaire. In 2025, xAI merged with the X platform, which he acquired in 2022 when it was still called Twitter .
Musk already controlled the companies before the merger. He held approximately a 42% stake in SpaceX and 80% of the voting shares in the rocket manufacturer.
Company valuations have been steadily increasing as a result of secondary stock sales and efforts to raise new capital.
The M&A is happening just as the market considers SpaceX's IPO a certainty. SpaceX shares were valued at $527 each. Last December, the company initiated a secondary share offering seeking to value the shares at $421 each. The following month, in January of this year, xAI completed a $20 billion funding round.
Last week, SpaceX stated its intention to deploy an orbital network of data centers powered by artificial intelligence, comprised of up to one million satellites. The company will need to obtain authorization from telecommunications authorities to deploy this fleet.
"Using solar energy from space will be a transformative way to power the computational resources needed for AI," Musk stated.
While he sets his sights on space with his SpaceX, the social media platform X is in the midst of a police scandal. On April 20th, the businessman will give a statement to the Paris prosecutor's office. The investigations began last year.
In addition to him, former CEO Linda Yaccarino and other employees of the social network were summoned to speak about the alleged irregularities committed by the company. The action also comes after a wave of public outrage over the way Grok disseminated sexualized images of women and children.
On Tuesday, February 3rd, the offices of X in Paris were the target of search and seizure warrants. Investigators from the Paris Public Prosecutor's Office, the national cybercrime unit, and the European Union Agency for Law Enforcement Cooperation (Europol) participated in the searches.
The searches took place on the same day that the UK Information Commissioner's Office (ICO) announced the launch of a new investigation into X and xAI, stating that it had "serious concerns" about Grok's use of personal data and "its potential to produce harmful content of sexualized images and videos."
Because of this, Musk has become the target of regulatory agencies in several countries in recent weeks, after people began using Grok to generate deepfakes of other people without their consent.
The French investigation began by examining X's algorithms, but has since expanded to examine the dissemination of AI-generated sexual abuse material, as well as publications denying crimes against humanity.
In January, the UK media regulator (Ofcom) began its investigation into X, the platform where the offensive content was distributed, but is not yet investigating xAI because the UK's Online Safety Act does not yet apply to all AI chatbots.
After facing pressure from several countries, X implemented technological measures to prevent the AI tool from being used to manipulate photos of real people and limited the creation and editing of images to subscribers of the tool.
In response, Musk stated that users who use Grok to generate illegal content "will suffer the same consequences" as those who send illegal material.
Last year, still at the beginning of the process, Musk even said that French prosecutors were starting a "politically motivated criminal investigation."
"At this stage, conducting this investigation is part of a constructive approach, with the ultimate goal of ensuring that the X platform complies with French law, insofar as it operates within the country's territory," the Paris prosecutor's office said at the time.
