CPP Investment Board Faces Scrutiny Over $416M Stake in Elon Musk’s xAI

The Canada Pension Plan Investment Board (CPPIB) is facing mounting scrutiny after it was revealed that the fund invested approximately $416 million in xAI, the artificial intelligence company founded by Elon Musk. The investment has drawn intense criticism following global backlash against Grok, xAI’s chatbot integrated into X, which has been linked to the creation of non-consensual sexualized deepfake images, including those involving women and minors.

The investment was disclosed in CPPIB’s quarterly report last year and later highlighted by Canada’s National Observer. Since then, Grok has become a focal point of regulatory investigations and public outrage, raising serious questions about governance, ethics, and risk management tied to public pension money.

CPPIB Condemns Grok Misuse but Maintains Investment

In response to the controversy, Canada Pension Plan Investment Board acknowledged the seriousness of the situation, calling the misuse of Grok “deplorable.” Michel Leduc, CPPIB’s chief public affairs officer, stated that the fund “unequivocally condemns” practices involving non-consensual imagery and child safety violations.

However, CPPIB confirmed it will maintain its investment in xAI, emphasizing that its financing is tied specifically to the construction and operation of a data-centre asset in Memphis, Tennessee, rather than Grok’s consumer-facing features. Leduc added that Canada Pension Plan Investment Board is actively pushing for stronger safeguards, including hard blocks on generating sexualized imagery, independent safety assessments, transparency reporting, and board-level oversight.

X Blocks Grok From Undressing Images of Real People Amid Global Backlash

Global Backlash and Legal Fallout

The Grok controversy has triggered swift international consequences. Indonesia and Malaysia have blocked Grok, while investigations have been launched by the UK’s media regulator and California’s attorney general. In Canada, the Office of the Privacy Commissioner has expanded an ongoing investigation into xAI and X Corp to include Grok’s ability to generate non-consensual images.

The company has also been hit with lawsuits, including one filed by influencer Ashley St. Clair, who alleges that Grok was used to generate deepfake images of her without consent.

Critics Question Ethical Investment Standards

Former NDP MP and democracy advocate Charlie Angus has been one of the most vocal critics, questioning whether the Canada Pension Plan Investment Board’s Grok investment aligns with ethical standards expected of a public pension fund. “What is the Canada Pension Plan ready to invest in?” Angus asked, warning that such decisions risk undermining public trust at a time of growing threats to democracy and sovereignty.

Governance experts have echoed those concerns, suggesting CPPIB may have underestimated the political, reputational, and ESG risks associated with Musk’s AI ventures—particularly given prior concerns about content moderation on X.

As AI regulation tightens worldwide, CPPIB’s investment in xAI is fast becoming a test case for how public pension funds balance innovation with accountability. While the board insists it is managing risks responsibly, critics argue that the fallout from Grok underscores the dangers of investing public retirement savings in rapidly evolving—and increasingly controversial—AI platforms.

With regulatory scrutiny intensifying, Canada Pension Plan Investment Board’s $416 million bet on xAI may shape the future conversation around ethics, oversight, and public trust in the age of artificial intelligence.