With its ad revenue in decline, and development costs mounting, X is making a new push on its Grok AI chatbot, as it launches the latest version of the tool to paying users in the app.
As you can see in this image, X is now highlighting Grok in the left-side function bar, with a blue “New” tag to grab attention.
Earlier this week, X rolled out Grok 2 to all users, which includes image generation capabilities (powered by Flux), along with various functional improvements to enhance X’s generative AI experience.
As explained by X:
“???? Premium and Premium+ users will have access to two new models: Grok-2 and Grok-2 mini. Grok-2 is our state-of-the-art AI assistant with advanced capabilities in both text and vision understanding, integrating real-time information from the ???? platform. Grok-2 mini is our small but capable model that offers a balance between speed and answer quality. Compared to its predecessor, Grok-2 is more intuitive, steerable, and versatile across a wide range of tasks, whether you’re seeking answers, collaborating on writing, or solving coding tasks.”
Indeed, xAI claims that the latest version of Grok “outperforms both Claude and GPT-4 on the LMSYS leaderboard in terms of its overall Elo score”, making it comparable, if not better than various other tools in the market.
And now, X is hoping to use Grok to pump X Premium sign-ups, which it hopes will help to reduce its dependence on ad revenue, and get its business back on track.
Though X is in a tough spot in this respect.
According to reports, X’s overall ad revenue has declined by around 70% since Elon Musk took over at the platform in 2022. X is also losing users, with the app down 5 million actives in Europe over the past year, while it’s also facing bans and fines in various regions over its refusal to comply with government requests.
At the same time, X’s debt servicing costs, based on loans Musk obtained to purchase the app, have increased its financial burden.
So, on balance, X is up against it, though xAI may be its key hope in this respect, with Elon’s pet AI project securing $6 billion in funding from investors back in May.
The project has gained the backing of Saudi Prince Alwaleed bin Talal, who’s keen to invest more in AI projects, which could give it a steady stream of capital to support the project for some time yet.
And since xAI is reliant on data from X to power its systems, there may be some way for Musk to funnel funding from one project to the other, so that may provide a valuable lifeline to X. It’s unclear how exactly this would work, but X could have alternate funding, outside of its direct revenue streams.
But even so, X will eventually need to stand on its own, as a sustainable business venture. Musk has said so himself, though it’s difficult to see how his “free speech” approach to content moderation will ever gel with advertiser demands for brand safety and assurance.
Musk’s original plan for his X project involved maximizing subscriptions via X Premium, which he hoped would eventually account for 50% of the platform’s revenue. It’s not close to that as yet, but its advanced Grok model is the next lure to get more people to sign up, thus reducing its reliance on ad dollars over time.
But with various other AI tools already available, and the AI hype train losing some steam of late, it’s hard to see this becoming a major factor in the rejuvenation of the app.
Still, X is clearly making this a focus, as it works to find new ways to drive income, and boost its opportunities.
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