Elon Musk's xAI Sues Minnesota to Block Ban on AI 'Nudify' Apps

Elon Musk's xAI, part of X Corp under the X.AI Holdings structure formed when xAI and X merged in 2025, filed a federal lawsuit Monday against Minnesota Attorney General Keith Ellison over a new state law banning so-called nudify apps, according to CNBC.

The complaint, filed in federal court in Minnesota, argues the statute is an "overbroad, content-based ban on free speech and the tools of visual expression," per court filings cited by CNBC. The law is set to take effect Saturday, August 1.

Minnesota's law targets apps and websites that let users generate non-consensual sexualized images of real people. Violators face fines up to $500,000 per instance, according to CNBC's reporting.

State Sen. Erin Maye Quade pushed the bill after learning a man had used social media photos to create sexualized images and videos of more than 80 women he knew, without their consent, CNBC reported. Maye Quade compared the law to older statutes banning voyeurism, telling CNBC in September that this is simply updating peeping-tom laws for the AI era.

The Free Speech Argument

xAI is not arguing that nudify content is good. It's arguing the law is written too broadly and could sweep up legitimate image-editing or expressive tools alongside genuinely abusive ones. Content-based speech restrictions get strict scrutiny under the First Amendment, and vague statutes that ban categories of software rather than specific harmful conduct have a real history of getting struck down in federal court.

Minnesota lawmakers will need to show the statute is narrowly tailored to the actual harm, non-consensual sexualized deepfakes, rather than a blanket ban on a broader category of AI tools. Courts have not yet ruled on this specific Minnesota law, and no judgment has been issued.

The underlying problem lawmakers were responding to remains. Nudify apps have been used to strip clothing from real photos of real, identifiable women and minors without consent, and the harm to those individuals is not hypothetical or abstract.

xAI's Own Legal Trouble

While fighting Minnesota's law, xAI is simultaneously defending itself in a proposed class action lawsuit from plaintiffs alleging the company's Grok chatbot and image generator were used to create and share child sexual abuse material depicting them as minors, based on real photos or videos, according to CNBC. The suit further alleges xAI failed to report alleged perpetrators to authorities.

xAI disputes the characterization of its product. The company states in its Minnesota complaint that it "strictly prohibits" users from generating nude or sexualized images without consent, and says it has already sued individual users who "evade its extensive technological blockers" to generate such content anyway, according to CNBC.

A company saying it bans a behavior and actively sues violators is different from a company that built the behavior as a feature. xAI is asking a federal court to strike down a law aimed at the exact conduct the company says it already prohibits and polices. If Grok's blockers are as extensive as the company claims, a narrowly written ban on non-consensual nudify tools shouldn't burden xAI's legitimate use cases much at all.

A Pattern Across States

Minnesota isn't the only fight. xAI has filed a similar suit challenging a California law aimed at AI-generated deepfake content, CNBC reported. Musk's company is now litigating the same core legal theory, that state nudify/deepfake bans violate the First Amendment, in at least two states simultaneously.

None of the underlying lawsuits, against xAI or by xAI, have been resolved. No court has ruled on the constitutionality of Minnesota's law, and no verdict has been reached in the CSAM class action against Grok. Both are open legal questions moving through the federal court system.

The Minnesota law's Saturday effective date means a federal judge could be asked to rule on a preliminary injunction before it even takes effect. Whether the statute survives, gets narrowed, or gets blocked entirely will likely shape how other states write similar laws going forward, including whatever comes next in California's parallel fight with the same company.