According to an exclusive report by Reuters, Grok—the chatbot developed by SpaceX-owned AI startup xAI—has suffered a major defeat in its bid to win the U.S. government, the world's largest customer. This failure directly weakens the "AI growth story" that SpaceX has been aggressively promoting ahead of what is expected to be the largest IPO in history. SpaceX had promised investors that xAI would help it carve out a share of the multi-trillion-dollar AI services market, but reality has dealt that ambition a harsh blow.
Through interviews with 7 federal employees and 3 contract experts, along with an analysis of government AI inventory files, Reuters found that Grok is almost completely absent from federal agencies. This stands in stark contrast to competitors like ChatGPT, which are already widely deployed. The data also reveals a sharp market slowdown: Grok's app downloads dropped from over 20 million in January to roughly 8.3 million in April—a decline of nearly 60%. More critically, the paid subscription conversion rate languishes at just 0.17%, while ChatGPT's rate exceeds 6%.
