xAI Restructures: 500 Laid Off, Plans to Hire Specialist Tutors
Elon Musk's artificial intelligence company xAI has laid off 500 employees from its data annotation division. These employees, known as 'generalist AI tutors,' were responsible for training Grok, the company's flagship AI chatbot. The move is part of a major restructuring aimed at focusing on specialist AI tutors who can provide domain-specific expertise.
The layoffs, first reported by Business Insider, were a surprise to employees, who were informed via email late on Friday, September 12, 2025. Employees were assured pay until November 30 but lost access to internal systems immediately. Reports also indicated that several senior staff members had their accounts deactivated over the weekend.
Data annotators played a crucial role in Grok's development, providing training examples, evaluating responses, and classifying information to enhance performance. Many earned between USD 35 and USD 65 per hour. However, xAI is now shifting from generalists to hire domain experts, claiming it will 'grow the specialist tutor team by 10X.'
This change follows concerns earlier this year when tutors were asked to scan their faces for AI training purposes, a controversial request that raised unease among some. Several former employees reported being called into one-on-one review meetings and asked to justify their value to xAI. This approach reflects Elon Musk's well-known demand for accountability, similar to his leadership style at Tesla and during his brief involvement in U.S. politics.
Additionally, Mike Liberatore, xAI's finance chief, quietly resigned at the end of July after just a few months in the role. Leadership changes have been a recurring theme across Musk's companies, often signaling significant strategic shifts.
Founded in 2023, xAI positions itself as a rival to OpenAI, Google, and Anthropic. Its chatbot Grok is known for its witty, sometimes sarcastic personality. By focusing on specialists, Musk hopes Grok will become more accurate, safe, and competitive. However, with layoffs and executive departures, questions remain about whether xAI can maintain momentum in the fast-moving AI race.