xAI general counsel James Burnham sent internal guidelines to staff last week instructing employees to restrict interactions with workers at AI coding startup Cursor to only what is necessary for a technical partnership the two companies announced in April, according to people familiar with the matter. The directive is aimed at preventing “gun-jumping” — the antitrust risk of two companies improperly commingling operations before a deal receives regulatory approval. Engineers at xAI are permitted to share data and code for joint model training and may use intellectual property from either company, including Grok, but only in the context of developing that shared model. The warning landed on the same day SpaceX filed IPO paperwork for what is expected to be among the largest public listings in history.
The timing is significant because SpaceX — which absorbed xAI in a $1.25 trillion all-stock merger in February — holds a 30-day acquisition option for Cursor that opens shortly after the IPO. The potential deal values Cursor at roughly $60 billion; if SpaceX does not exercise the option before end of 2026, it owes a $10 billion breakup fee. The complication is that Cursor employees are already on-site at xAI’s offices collaborating under the partnership, making clean separation difficult in practice. Cursor reached $2 billion in annualized recurring revenue by February 2026. Meanwhile, xAI is navigating significant internal turbulence: all 11 of its co-founders have departed, layoffs and new hires are running simultaneously, and Musk publicly ordered cuts in March after frustration with the company’s performance on coding tasks relative to Anthropic’s Claude Code and OpenAI’s Codex.