Elon Musk’s artificial intelligence company, xAI, has undertaken a significant restructuring, resulting in the layoff of nearly 500 employees from its data annotation team, the company’s largest unit. This team, responsible for serving as “generalist AI tutors,” played a key role in training Grok, xAI’s chatbot.
Employees affected by the layoffs will continue to receive pay through the end of their contracts or until November 30, although their access to company systems has been revoked immediately.
The move signals a major strategic shift for xAI. While the generalist tutor team has been largely eliminated, the company has announced plans to expand its specialist AI tutor team tenfold, emphasizing a focus on highly skilled, targeted roles. Despite the cuts, xAI confirmed it is continuing to recruit across other areas of the business.
The timing comes shortly after the departure of xAI’s Chief Financial Officer, Mike Liberatore, who left the company in July after a brief tenure. Industry analysts suggest that the layoffs reflect a broader effort to streamline operations, reduce reliance on large-scale data labeling teams, and pivot toward specialist expertise and automation as central drivers of AI development.
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