French prosecutors are looking into allegations that Elon Musk may have encouraged the production of sexually explicit video forgeries using the "Grok" AI to boost the market valuation of both 'X' and 'X AI'. This inquiry appears to stem from a potentially strategic move to enhance company value ahead of a planned public listing in June 2026 for a new entity formed from a merger between SpaceX and X AI. The prosecutors indicated that such tactics could be part of a larger scheme to manipulate market perceptions ahead of this significant financial event.

The platform 'X', which operates the 'Grok' technology, had previously announced a zero-tolerance policy for sexualized depictions of minors and women, implementing measures purportedly aimed at halting such practices following global outrage. This commitment, however, is now under scrutiny, particularly as investigations by the European Commission (EC) into 'Grok' began earlier this year, raising questions about its compliance with EU internet content regulations.

The implications of this investigation could be profound, not only for Musk and his companies but also for the regulatory environment surrounding AI and online content in Europe. If found guilty of manipulating content for financial gain, Musk could face not just legal consequences but also significant reputational damage in an already challenging landscape for tech giants dealing with regulatory pressures.