Discord in the Digital Realm: Musk's xAI and Telegram's Disputed Partnership Raises EU Regulatory Red Flags
In a digital landscape increasingly dominated by artificial intelligence, a high-profile partnership between two tech titans has descended into public contradiction and regulatory scrutiny. What began as an apparent landmark deal between Elon Musk's xAI and messaging platform Telegram has quickly devolved into conflicting public statements, regulatory concerns, and questions about data privacy that could reshape how AI companies operate in Europe.
Multiple sources confirm that a commercial agreement was initially reached between xAI, the company behind the chatbot Grok, and Telegram, the messaging platform with hundreds of millions of users worldwide. However, the nature, status, and even the very existence of this deal have become subjects of dispute between the principal figures involved, with billions in potential revenue and significant regulatory implications hanging in the balance.
The Deal That May or May Not Exist
According to reports from Reuters and TechCrunch published in late May 2025, xAI and Telegram appeared to have finalized a major commercial agreement that would give xAI access to Telegram's massive user base while providing Telegram with both a financial stake in xAI and a revenue-sharing arrangement.
The deal, as initially reported, would involve integrating xAI's Grok chatbot into Telegram's platform, potentially allowing the AI to access and learn from user interactions within the messaging app. This would represent a significant expansion of xAI's data sources beyond X (formerly Twitter), which Musk also owns.
However, within hours of these reports, contradictory statements emerged. Pavel Durov, Telegram's founder, announced through the platform that the companies had reached an agreement in principle, with formalities still pending. Almost simultaneously, Musk himself disputed this characterization on X, responding to a user's post about the deal with a terse denial: "No - is fully to me now."
This public contradiction between two of tech's most prominent figures has left industry analysts scrambling to determine the actual status of the partnership. Financial details reported in the initial coverage suggested a deal worth hundreds of millions of dollars, with a percentage-based revenue sharing arrangement that could ultimately be worth billions depending on user adoption.
Data Privacy Concerns Take Center Stage
Beyond the confusion surrounding the deal's status lies a more fundamental concern: how user data would be handled under such an arrangement. The potential partnership has raised immediate red flags among privacy advocates and regulatory bodies, particularly in the European Union where the General Data Protection Regulation (GDPR) imposes strict requirements on data collection and processing.
At issue is whether users of Telegram would be implicitly consenting to having their interactions harvested for AI training purposes simply by engaging with the Grok chatbot. Durov has attempted to assuage these concerns, stating that xAI would only have access to direct interactions between users and the Grok chatbot itself, not to other conversations on the platform.
"User privacy remains our paramount concern," Durov stated in a message to Telegram users. "Any AI integration would only process data that users explicitly share through direct interaction with the chatbot. Your private conversations remain private."
However, privacy experts remain skeptical about how such limitations would be technically implemented and enforced. Dr. Claudia Winkler, a data protection specialist at the European Digital Rights Initiative, expressed concern about the potential for function creep.
"The history of data collection in digital platforms shows a consistent pattern of expansion beyond initial boundaries," Winkler noted in an interview. "What begins as limited collection often grows incrementally until comprehensive surveillance becomes normalized. The question is not just what data is collected today, but what might be collected tomorrow under the same user agreement."
xAI's Existing Regulatory Challenges
This potential partnership comes at a particularly sensitive time for xAI, as the company is already facing regulatory scrutiny in Europe. Multiple sources confirm that investigations are currently underway regarding xAI's data practices, particularly concerning how the Grok chatbot utilizes user data from X.
The European Data Protection Board (EDPB) launched an inquiry in early 2025 into whether xAI's collection and processing of user interactions on X comply with GDPR requirements. At issue is whether users are adequately informed about how their data is being used to train AI systems and whether they have provided valid consent for such use.
A spokesperson for the EDPB, speaking on condition of anonymity due to the ongoing nature of the investigation, confirmed that the inquiry has expanded to include the potential Telegram partnership. "We are closely monitoring developments regarding any expansion of xAI's data collection practices. The fundamental principles of data minimization, purpose limitation, and informed consent must be respected regardless of the business arrangements between companies."
The timing of these regulatory challenges may explain some of the confusion surrounding the deal. Industry analysts suggest that regulatory concerns may have caused one or both parties to reconsider aspects of the arrangement after initial terms had been agreed upon.
The Complex Web of Musk's Digital Empire
Complicating matters further is the overlapping ownership and operational structure of Musk's various technology ventures. As the owner of both X and xAI, Musk has already faced questions about how data flows between these entities.
When Grok was initially launched, it was presented as being trained on public posts from X, raising questions about whether users of the social media platform had effectively consented to having their content used for AI training. The addition of Telegram as a potential data source would further complicate this already tangled web of data sharing arrangements.
Dr. Jonathan Albright, research director at the Digital Forensics Initiative, points to the opacity of these arrangements as a fundamental problem. "The public has very little visibility into how data flows between Musk's companies. Users of X may not realize their interactions are potentially being used to train Grok, and now Telegram users could be brought into this ecosystem without full awareness of the implications."
This lack of transparency extends to the financial arrangements as well. While initial reports suggested that Telegram would receive both a direct investment and ongoing revenue sharing, the exact terms remain unclear, particularly in light of the contradictory statements from Musk and Durov.
EU Regulatory Framework Poses Challenges
The European regulatory environment presents particular challenges for AI companies like xAI, especially when forming partnerships that involve data sharing. The EU's AI Act, which came into force in early 2024, imposes stringent requirements on high-risk AI systems, including those that might process personal data at scale.
Additionally, the Digital Services Act (DSA) and Digital Markets Act (DMA) create further obligations for large online platforms regarding transparency, content moderation, and competition. As both X and Telegram qualify as Very Large Online Platforms under these regulations, any partnership between them and xAI would need to navigate this complex regulatory landscape.
Margrethe Vestager, Executive Vice President of the European Commission for A Europe Fit for the Digital Age, has previously signaled that the Commission is paying close attention to how AI companies access and utilize user data. "The development of artificial intelligence must not come at the expense of fundamental rights, including privacy," Vestager stated in a speech earlier this year. "We will not hesitate to use all tools at our disposal to ensure compliance with EU law."
For xAI, which has already faced challenges in complying with European regulations, expanding its data collection through a partnership with Telegram could potentially trigger additional regulatory scrutiny. This may explain some of the apparent hesitation and contradiction surrounding the deal.
Financial Stakes and Market Implications
Beyond the regulatory concerns, the financial aspects of the potential deal highlight the enormous value being placed on AI capabilities and access to user data. According to sources familiar with the negotiations, the deal would have involved a direct investment valued in the hundreds of millions of dollars, plus a revenue-sharing arrangement that could ultimately be worth billions depending on user adoption.
For Telegram, which has sometimes struggled to monetize its massive user base, such a partnership could represent a significant new revenue stream. The company has previously experimented with cryptocurrency initiatives and premium features, but an AI partnership would mark a new direction in its business model.
For xAI, access to Telegram's hundreds of millions of users would provide valuable new training data and a massive distribution channel for its AI technology. This would potentially allow Grok to compete more effectively with other leading AI systems from companies like OpenAI, Anthropic, and Google.
Market analysts note that the confusion surrounding the deal has already had financial implications. "The contradictory statements from Musk and Durov have created significant uncertainty for investors in this space," noted Maria Chen, senior technology analyst at Global Investment Partners. "This kind of public disagreement about whether a major deal exists is highly unusual and suggests either a breakdown in communication or deeper issues with the partnership."
The Broader Context: AI's Data Hunger
The situation between xAI and Telegram reflects a broader tension in the AI industry: the insatiable need for data to train increasingly sophisticated models versus growing concerns about privacy and data rights.
Large language models like Grok require enormous amounts of text data for training, and access to real-time user interactions can be particularly valuable for improving performance. However, this data hunger often conflicts with principles of data minimization and purpose limitation that are central to modern privacy frameworks.
"We're seeing a fundamental collision between the technical requirements of current AI approaches and the legal and ethical frameworks that govern data use," explained Dr. Elena Simperl, professor of computer science specializing in AI ethics. "Companies are caught between competitive pressure to amass more data and regulatory pressure to limit collection and processing."
This tension is particularly acute in Europe, where the regulatory framework places greater emphasis on data protection than in some other markets. For companies like xAI that operate globally, this creates a complex compliance challenge that may require different approaches in different regions.
What Comes Next?
As the dust settles on the contradictory announcements, several possible scenarios emerge for the relationship between xAI and Telegram.
One possibility is that a preliminary agreement was indeed reached, but regulatory concerns or other issues have caused one or both parties to reconsider. The public contradiction might reflect genuine disagreement about the current status of the deal rather than whether initial terms were discussed.
Another possibility is that negotiations are ongoing but have been complicated by premature disclosure. The conflicting statements might be an attempt to manage expectations or strengthen negotiating positions rather than an accurate reflection of the deal's status.
A third possibility is that regulatory concerns, particularly in Europe, have forced a fundamental reconsideration of how such a partnership could be structured. The companies may be exploring alternative arrangements that would satisfy regulatory requirements while still achieving their business objectives.
Whatever the current status of the deal, the situation highlights the increasing complexity of operating in the AI space, particularly when it involves cross-border data flows and multiple regulatory regimes. For users of these platforms, the confusion underscores the importance of understanding how their data might be used and the limitations of current transparency mechanisms.
Implications for the Future of AI Regulation
The controversy surrounding the xAI-Telegram partnership may have implications that extend far beyond these specific companies. It could potentially influence how AI partnerships and data sharing arrangements are structured and regulated in the future.
European regulators are likely to view this situation as further evidence of the need for clear rules governing how AI companies access and utilize user data. The EU's AI Act already includes provisions related to transparency and data governance, but implementation details are still being worked out through delegated acts and guidance documents.
This case could potentially inform those implementation details, particularly regarding how consent should be obtained when user data from one platform is used to train AI systems that may be deployed elsewhere. It might also influence ongoing discussions about the need for specific regulations governing generative AI systems like Grok.
In the United States, where comprehensive federal privacy legislation remains elusive, the situation might add momentum to calls for clearer rules regarding AI and data use. Several bills addressing AI regulation have been introduced in Congress, though none have yet advanced to become law.
"This kind of high-profile confusion about data sharing between major platforms is exactly why we need clearer rules of the road for AI," said Senator Mark Warner, who has been involved in drafting AI legislation. "Users deserve to know how their data is being used, and companies need regulatory certainty to make sound business decisions."
A Watershed Moment for AI Governance
As the situation continues to unfold, it increasingly appears that the xAI-Telegram controversy may represent a watershed moment in the governance of artificial intelligence and the data that powers it. The public nature of the disagreement, the high profiles of the companies and individuals involved, and the clear regulatory implications have combined to create a case study in the challenges of AI development in a complex global regulatory environment.
For users of digital platforms, the situation serves as a reminder of how their data may be used in ways they didn't anticipate and the limitations of current disclosure and consent mechanisms. For regulators, it highlights the need for clear, enforceable rules that can keep pace with rapidly evolving technology. And for AI companies, it underscores the importance of considering regulatory compliance from the earliest stages of partnership discussions rather than as an afterthought.
As AI becomes increasingly integrated into digital platforms and services, the questions raised by this controversy will only grow more pressing. How companies answer these questions, and how regulators respond to their answers, will shape the development of artificial intelligence for years to come.
In the meantime, users of both Telegram and X are left wondering exactly what happens to their data when they interact with AI systems on these platforms—a question that, despite all the public statements and regulatory attention, remains frustratingly difficult to answer with certainty.