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EU Puts xAI’s Grok Under the Microscope as Risks for AI Stocks Rise

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The EU has launched a probe into xAI’s Grok after users deployed the chatbot to generate explicit images on X, heightening regulatory risks for AI platforms.

EU Puts xAI’s Grok Under the Microscope as Risks for AI Stocks Rise

Elon Musk’s artificial intelligence startup xAI remains in hot water after its Grok AI chatbot triggered a global backlash by generating unauthorized sexualized and violent images. The European Union has now opened an investigation into the matter, according to Regina Doherty, a member of the EU parliament.

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Earlier this month, private users and prominent figures across the world raised the alarm that users on the social media platform X were adopting Grok to create edited images of women in bikinis or see-through clothing. In response, the EU will review whether X has met its Digital Services Act duties, including mitigating risks and preventing the spread of illegal or otherwise harmful content, Doherty said.

Can the Grok Scandal Derail EU Plan to Soften AI Rules?

Already, the bloc’s Artificial Intelligence Act, which took effect in August 2024, sets out key requirements for developers of AI systems that pose serious risks to health, safety, or fundamental rights.

However, the latest development could jeopardize efforts to ease these rules — most of which are expected to take effect in August this year — even as the Act continues to draw scrutiny from Silicon Valley and President Donald Trump’s administration. This underscores the growing risk of heightened regulatory scrutiny, particularly for emerging AI companies.

It could also put pressure on the EU Council’s recent decision to back a softer stance on draft legislation that initially sought to force Big Tech companies to tackle child pornography on their platforms.

Earlier this month, the European Commission joined authorities across the world to condemn the use of Grok to generate and share explicit and child-like content on X, calling it “appalling” and “disgusting”. Thomas Regnier, the Commission’s spokesperson for digital affairs at the time, noted that such content has “no place in Europe” and that the pan-European watchdog is “very seriously looking” into the matter.

British authorities have also launched an investigation into the issue. Musk recently said his company was limiting image generation and editing to paying subscribers as a way to tackle the issue.

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