Minnesota’s attorney general got a two-word response from Gov. Tim Walz after xAI filed a lawsuit challenging the state’s new law banning nudify apps: “See you in court, creep.” That’s not the kind of press any company wants when it’s already under investigation on three continents.
According to Engadget, xAI, now officially called SpaceXAI following its merger with Elon Musk’s aerospace company, filed a complaint against Minnesota Attorney General Keith Ellison targeting a law set to take effect August 1, 2026. The law is the first of its kind in the United States. It bans apps and websites that generate nonconsensual intimate images and would fine developers $500,000 every time a user creates a sexual deepfake using their product. Gov. Tim Walz signed it earlier this year.
In its complaint, xAI argues the law is an “overbroad, content-based ban on free speech and the tools of visual expression.” The company says it doesn’t dispute Minnesota’s interest in stopping nonconsensual nude images of real people from spreading online. But it claims the law goes much further than that, exposing a wide range of protected speech to civil liability. With a $500,000-per-use fine structure, xAI says it would have “no practical choice” but to restrict Grok Imagine’s image-editing features the moment the law kicks in.
The timing is awkward, to put it mildly. Earlier this year, multiple reports surfaced showing xAI’s Grok allowed users to transform real photos of women and children into sexualized images. That triggered investigations from California regulators, the UK’s Ofcom, the European Commission, and Ireland’s Data Protection Commission, all at roughly the same time. xAI eventually added safeguards, but its own systems continued allowing users to undress people even after those measures were put in place. The company also recently sued a South Carolina user for generating nonconsensual intimate imagery of adults and minors using Grok, which it now cites as evidence of its commitment to enforcement.
This case sits inside a much larger fight over how AI image tools get regulated at the state level. Without federal legislation, individual states are writing their own rules, and companies like xAI, Google, and Adobe all face a fragmented patchwork of laws that could require them to geo-restrict features or build separate compliance logic for different jurisdictions. Minnesota’s $500,000-per-use penalty structure is aggressive by any standard, and a court ruling here could either embolden other states to follow the same model or force them to recalibrate.
The free speech argument xAI is making isn’t entirely without legal basis. Courts have struck down content-based restrictions before. But making that argument while regulators across three continents are actively investigating your product for enabling the exact harm the law is designed to prevent is a credibility problem that no legal brief can fully paper over.
