Elon Musk tried to derail OpenAI-led UAE deal, pressured Trump for xAI role: Report

Elon Musk reportedly attempted to obstruct a landmark artificial intelligence partnership between OpenAI and the United Arab Emirates unless his own startup, xAI, was brought into the fold, according to people familiar with the matter cited byThe Wall Street Journal.

The deal, announced on 22 May, involves a consortium of major American tech companies led by OpenAI and aims to build one of the largest AI data centres in the world, located in Abu Dhabi. It includes partners such as Oracle, Nvidia, Cisco and SoftBank, and is being spearheaded by G42, an Emirati AI company controlled by Sheikh Tahnoon bin Zayed al Nahyan, the UAE’s national security adviser and brother to the country's president.

Musk, whose company xAI has trailed OpenAI in terms of commercial reach, was reportedly angered after learning in mid-May that OpenAI CEO Sam Altman would accompany U.S. President Donald Trump on a tour of the Gulf region. Sources told theWSJ that Musk warned G42 officials that Trump would not approve any deal unless xAI was included.

Elon Musk vs OpenAI

Tensions escalated when Musk, having learned of the pending agreement, abruptly decided to join Trump’s trip, and appeared alongside the President in Saudi Arabia. White House aides later confirmed that Musk had voiced concerns about the fairness of the deal, although officials ultimately gave the project the go-ahead despite his objections.

One official noted that managing Musk’s reaction became a priority, as both Trump and his AI and crypto adviser, David Sacks, wanted to unveil the UAE partnership before the end of the Middle East tour. “This was another great deal for the American people, thanks to President Trump and his exceptional team,” said White House Press Secretary Karoline Leavitt.

This latest flare-up follows a pattern. In January, Musk reacted similarly to the announcement of the U.S.-based Stargate initiative—a separate AI investment effort involving OpenAI, Oracle and SoftBank. Musk reportedly complained then that the project lacked adequate funding, and criticised the initiative on his social platform, X.

Tensions between Musk and Altman have been simmering for years. The two co-founded OpenAI in 2015, but Musk left in 2018 amid internal disputes. Since then, their relationship has soured, with Musk accusing Altman of straying from the organisation’s nonprofit roots and publicly mocking him with derogatory nicknames. In 2023, Musk even filed a lawsuit against Altman, alleging a betrayal of OpenAI’s original mission.

Despite his objections, Musk maintains strong business ties in the region. Tahnoon’s MGX fund was a key investor in a $6 billion fundraising round for xAI last December. In February, Dubai inked a deal with Musk’s Boring Company to develop an 11-mile underground tunnel network. At the same event, Musk appeared virtually alongside the UAE’s Minister of AI.

The Emirates, eager to diversify their oil-reliant economy, have made AI a top strategic priority. After the Biden administration curbed exports of advanced AI chips to the UAE and others, the Gulf nation successfully lobbied the returning Trump administration to ease restrictions. In return, they promised substantial investments in American infrastructure and AI partnerships.

The Stargate UAE Project

Under the framework agreement, the Stargate UAE project is set to host multiple American tech companies in a sprawling data hub powered by an estimated five gigawatts of energy—surpassing any existing single-site data centre in the U.S. The UAE will also fund a mirror project on American soil as part of the bilateral arrangement.

While xAI was not included in the initial announcement, WSJ says it remains on a shortlist of U.S. firms conditionally cleared to acquire a significant share of the 500,000 high-end AI chips permitted annually under the deal. The future phases of the Stargate project could still involve Musk’s firm.

(With inputs from WSJ)