Musk's xAI Lands Pentagon Deal for Grok in Classified Military Systems

Grok Enters Classified Military Systems

On February 23, 2026, Elon Musk's AI company xAI reached an agreement with the U.S. Department of Defense to deploy its Grok models in classified military systems. According to reporting by Axios, the agreement allows Grok to be used in classified intelligence analysis, weapons development workflows, and battlefield operational support systems.

The Key Difference: Accepting All Lawful Purposes

The central issue in AI defense contracting has been the scope of permitted use. xAI accepted the "all lawful purposes" condition that Anthropic refused. This means the Pentagon's 3 million military and civilian personnel can use Grok broadly across sensitive government workflows, without the restrictions Anthropic sought to impose around mass domestic surveillance and autonomous weapons.

DOGE Connections Draw Scrutiny

The agreement between xAI and the Pentagon has raised conflict-of-interest concerns, given that Musk simultaneously leads the Department of Government Efficiency (DOGE) and benefits commercially from the deal. Critics argue the arrangement warrants independent review. The administration has maintained the contract followed proper procedures.

A New Competitive Landscape in Defense AI

With xAI's entry, the defense AI market is becoming crowded. Just four days later on February 27, OpenAI also signed its own deal with the Pentagon. Anthropic was simultaneously banned from all federal business. The week marked a seismic reshuffling of which AI companies will power the U.S. military's most sensitive operations.

Source: Axios