Employees at xAI received written guidance from the company’s general counsel directing them to curb engagement with personnel from Cursor, an AI coding startup that xAI may ultimately bring under SpaceX ownership.
According to the guidance circulated last week, James Burnham, xAI’s general counsel, told staff to limit contact with Cursor employees to activities explicitly necessary for the technical partnership the two companies announced in April. That agreement, the guidance stressed, covers collaboration on computing resources and coding work but is legally distinct from the potential acquisition.
The memo was issued on the same day that SpaceX, which is the parent company of xAI, filed paperwork for an initial public offering. Burnham told employees that xAI and Cursor remain separate legal entities and must continue to operate independently until any acquisition by SpaceX is completed and regulatory approval has been obtained.
Legal counsel also warned employees that communications between personnel at the two firms could be subpoenaed as part of a regulatory review. The lawyers advised caution because assertions that the companies had improperly merged operations or coordinated business decisions before regulatory clearance could jeopardize any proposed deal.
SpaceX’s IPO filing, submitted last week, outlines that the company would hold an option to acquire Cursor during a 30-day window starting shortly after its public listing. The April agreement provides SpaceX the right to acquire Cursor for $60 billion or, alternatively, to pay a $10 billion breakup fee.
The guidance from xAI’s legal team referenced applicable U.S. antitrust rules that bar merging parties from combining assets or making joint business decisions prior to review by the Department of Justice or the Federal Trade Commission. The memo noted that violations of these rules can result in significant financial penalties and could delay the closing of a transaction.
The legal directive follows several weeks in which staff from xAI and Cursor have been collaborating under the technology partnership announced in April. The guidance appears designed to preserve a clear separation of operations and communications during the period when any acquisition option might be exercised and regulators may review the transaction.
Context and procedural limits
The message to employees emphasized two practical limits: keep day-to-day engagement strictly within the scope of the technical partnership, and be mindful that any cross-company communications may be subject to regulatory scrutiny. The company framed these measures as steps to avoid claims that the parties have combined operations prematurely.
While the filing establishes a post-IPO window during which SpaceX can choose to exercise its purchase option, the guidance leaves intact the requirement that both businesses preserve separate corporate decision making and operational independence while regulatory review is pending.
Reporting reflects statements from xAI’s general counsel and details disclosed in SpaceX’s IPO filing as described to employees.