On January 26, 2026, in accordance with the Digital Services Act (DSA), the European Union formally initiated an investigation into Musk's xAI company. This action came after it was discovered that the company's chatbot, Grok, had generated and spread a substantial volume of deepfake sexualized images targeting women and children.

Some users took advantage of Grok's 'Spicy Mode' feature to create unauthorized, false sexually explicit content. They then disseminated this content on the social platform X as well as through standalone apps. The victims of this malicious act include hundreds of adult women and minors. In some extreme cases, it even involved the manipulation of children's images.

This incident has triggered regulatory actions from multiple countries. For instance, the California Attorney General's Office and the UK's Office of Communications had previously launched investigations into xAI. These agencies demanded that the company take corrective measures and prevent the further spread of non-compliant content.

The European Commission stressed that as a 'very large online platform,' xAI must bear stricter compliance obligations. These include conducting risk assessments, protecting minors, and exercising control over illegal content. If xAI is found to be in violation of the regulations, it could face a substantial fine of up to 6% of its global annual revenue.