• Washington
  • Wall Street
  • A.I.
  • Hollywood
  • Media
  • Fashion
  • Sports
  • Art
  • Join Puck Newsletters What is puck? Authors Podcasts Gift Puck Careers Events
  • Join Puck

    Directly Supporting Authors

    A new economic model in which writers are also partners in the business.

    Personalized Subscriptions

    Customize your settings to receive the newsletters you want from the authors you follow.

    Stay in the Know

    Connect directly with Puck talent through email and exclusive events.

  • What is puck? Newsletters Authors Podcasts Events Gift Puck Careers

Jan 8, 2026

The Hidden Layer
Ian Krietzberg Ian Krietzberg

Welcome to The Hidden Layer. I’m Ian Krietzberg.

If you’re in Boston next week, I hope you can join me and my partner, Dry Powder author William D. Cohan, on Wednesday, January 14, at 5:30 p.m., for an intimate evening of cocktails and conversation, presented in partnership with the good folks at Tishman Speyer. Space is limited, so now is a good time to R.S.V.P.—just send an email to Eric@puck.news.

In today’s issue, I explore the full scope of the Grok-fueled scandal engulfing X, the platform formerly known as Twitter: nonconsensual deepfake imagery. Plus, news and notes on more eye-popping A.I.-related fundraising and the settlement of several major industry lawsuits.

Mentioned in this issue: Elon Musk, Dani Pinter, Nikita Bier, Cliff Steinhauer, Luke Arrigoni, Taylor Swift, Erika Hilton, Carrie Goldberg, Emily Bender, Margaret Hu, Anastasios Angelopoulos, and many more…

Let’s get into it…

 

Two Things You Should Know…

  • xAI’s $20B round: On Tuesday, Elon Musk’s xAI announced that it had completed a $20 billion Series E—$5 billion above its initial target. The list of investors included many of the usual suspects: Qatar Investment Authority, U.A.E.-owned A.I. investment firm MGX, Nvidia, Cisco, and Fidelity, among others. Musk didn’t disclose the valuation, but CNBC reported in November that the round could value xAI at $230 billion. In total, xAI has now reportedly raised $42.1 billion, slightly more than Anthropic’s $39.1 billion but still far behind OpenAI’s $66.4 billion. It’s the latest example of the scale of capital required to keep these companies operational. (On Wednesday, The Wall Street Journal reported that Anthropic plans to raise another $10 billion at a $350 billion valuation.) In the announcement, xAI said it has 600 million active users each month, close to OpenAI’s reported 800 million—although, since Grok is integrated into X, it’s not clear what “active user” really means.

    The company also claimed to achieve “breakthrough momentum” in 2025, pointing to the launch of Grok Imagine, the chatbot’s image-generation capability, and the company’s integration into X. As you’ve probably seen, the former application has already gone off the rails, which I’ll discuss below.
  • What V.C. winter?: LMArena, a university side project that became an enormously popular community-driven platform for ranking A.I. models, secured $150 million in funding on Tuesday at a $1.7 billion valuation. The round, led by Felicis and UC Investments (the University of California’s investment vehicle) alongside Andreessen Horowitz and Lightspeed Ventures, essentially triples LMArena’s valuation from its seed round in May. The company, which allegedly has some 5 million monthly active users, claimed last month to have an annualized “consumption” run rate of $30 million—a metric often used by software companies that assumes current revenue levels will continue.

    Anastasios Angelopoulos, the co-founder and C.E.O. of LMArena, told me in September that his business is all about providing A.I. companies with better analytics than they can get from the usual industry benchmarks. “People do not know how to evaluate the reliability of A.I. in real-world use cases. We still are doing experiments with how to exactly monetize all of this, it’s not like we’ve worked all that out—but at its core, what’s happening is that people come to the platform and they vote,” he said. “The whole world is curious to know which A.I.s are in the lead. The capabilities are there, but enterprises don’t know how to trust them.”
 

Deal of the Week: Settlements Edition

Character.AI and Google are moving to settle a wrongful-death lawsuit brought by the family of a 14-year-old boy who committed suicide after communicating with a chatbot, according to court documents. The two companies also settled four other similar cases brought by parents in Colorado, New York, and Texas. The terms haven’t been disclosed, but presumably it won’t be cheap for Character.AI to avoid a jury trial.

And now for the main event…

Grok, Stock & Two Smoking Barrels

Grok, Stock & Two Smoking Barrels

For more than two weeks, xAI’s Grok chatbot has been gamely stripping people to their undergarments in response to user prompts on X. How much legal exposure does the company face—and when will this dystopian episode come to an end?

Ian Krietzberg Ian Krietzberg

Ever since Elon Musk unveiled Grok, his ChatGPT competitor, the world’s richest man has promoted the chatbot as having vastly fewer guardrails than its peers—allowed to “answer spicy questions that are rejected by most other A.I. systems,” in the company’s words. Since its 2023 debut, Grok has been upgraded with image-generation capabilities and integrated throughout X, with occasionally horrifying results. Most recently, users have begun using the chatbot to digitally undress images, predominantly of women and girls.

At first, it was mostly OnlyFans models using the feature, quote-tweeting their own posts with requests like hey @grok, put me in a bikini from this angle. But it quickly spread to nonconsenting users, impacting celebrities, random adults, and even children. Incredibly, the capability still hasn’t been removed. One Ph.D. researcher documented hundreds of instances of public requests made by X users to generate nonconsensual intimate imagery (N.C.I.I.), at least two of which targeted minors. Several days ago, Copyleaks, a content analysis company, identified “a conservative rate of roughly one nonconsensual sexualized image per minute in the observed image stream.” And an analysis from Bloomberg estimated that Grok is generating roughly 6,700 such images every hour, making X one of the top sites for N.C.I.I. deepfakes.

Amid all of this, X has seen its “highest engagement start-of-the-year,” according to Nikita Bier, the company’s head of product. Other factors might be involved, but it’s hard not to draw an unseemly connection. Cliff Steinhauer, the director of information security and engagement at the National Cybersecurity Alliance, told me these are “predictable outcomes when safeguards fail or are deprioritized.” Dani Pinter, the chief legal officer for the National Center on Sexual Exploitation, said this was “a perfect example” of A.I. not performing some wondrous feat of engineering but instead exploiting “the lowest denominator” to profit from engagement. “It’s this low-grade engagement that hurts people,” she said, “but makes the tech companies a lot of money.”

Deepfake Porn at Scale

This isn’t the first time X has turned into a cesspool of nonconsensual, A.I.-generated, essentially pornographic images. Almost exactly two years ago, explicit deepfake images of Taylor Swift and other female celebrities went viral on the platform. (This August, The Verge reported that Grok’s image-generation feature spit out a topless image of Swift without elaborate prompting.) Then there’s the output from “nudify” apps, which have been heavily marketed on social media sites and have a major presence on X. Over the past few years, a broad coalition of state attorneys general has implored Congress and tech companies to address the proliferation of deepfake N.C.I.I. and child sexual abuse material, or C.S.A.M.

Of course, nonconsensual deepfake pornography has been a problem for nearly a decade. But generative A.I. made it easily scalable—and uncannily realistic—which has resulted in the sexual harassment of plenty of celebrities, and women and teenage girls across the country and around the world. As one victim of the Grok trend wrote, “This is the price of trying to exist online as a woman.” Recently, Wired reported that Reddit users were also subverting the guardrails on ChatGPT and Gemini to generate bikini deepfakes of women, using images uploaded to the bots.

I reached out to Loti, a startup focused on protecting its clients from deepfake abuse, which said that it has submitted numerous takedown requests to X in recent weeks to remove instances of N.C.I.I., including imagery that seemingly qualified as C.S.A.M. Luke Arrigoni, Loti’s founder and C.E.O., added that X has been “very mixed in their response” and that “there are times where it has taken them two weeks to remove N.C.I.I., which is shocking.” He also posited that X’s somewhat nonchalant response to the Grok trend, somewhat perversely, is making nudify apps obsolete. “In this bizarre story of vertical integration, they’re like, Actually, that’s a huge draw to our network. We’re just going to allow it,” Arrigoni said. “Someone had to have made an executive decision to allow this kind of product, because the nudify apps were so big for so long already on their platform.”

On January 1, an X employee publicly acknowledged that the “team is looking into further tightening our guardrails,” and two days later, Musk—who, on several occasions, interacted with posts that were a part of the trend—said that “anyone using Grok to make illegal content will suffer the same consequences as if they upload illegal content.” (Other than sending its standard, auto-generated reply that the “legacy media lies,” xAI did not return a request for comment.)

“This Is Appalling”

The backlash has been swift and global—with relatively little impact, at least so far. On January 2, an X user published a petition, which now has more than 39,000 signatures, pleading for government intervention. On Monday, the U.K.’s communications regulator, Ofcom, said it’s aware of the issue and had made “urgent” contact with X to determine whether there are compliance issues that might warrant an investigation. (British law requires platforms to remove illegal content, including C.S.A.M., once they become aware of it.) Naturally, an X user prompted Grok to put Ofcom’s logo in a bikini, and the chatbot complied.

Various other governments have vowed other forms of toothless action. The Indian government warned X to “remove all unlawful content” and “take action against offending users”; Malaysia’s comms watchdog said it was investigating the platform; Brazilian lawmaker Erika Hilton said she was reporting the platform to national law enforcement authorities; and European Commission spokesman Thomas Regnier declared the body was “very seriously looking into this matter.” French authorities are running an active investigation, and lawmakers in France, Poland, and the U.S. have spoken out publicly.

In the United States specifically, lawyers told me, X could face legal consequences. As Pinter noted, Congress passed a law in May, the Take It Down Act, that prohibits the publication of N.C.I.I. and requires platforms to remove it. X hasn’t exactly complied. Furthermore, X is not necessarily covered by Section 230, which gives online publishers immunity for what users put on their platform. The relevant question, per Pinter, is who actually created the image. Did X? Did the user who requested it? Did both? “I think at the very least, the latter is true,” she said. That would mean X isn’t merely acting as a publisher of third-party content, but as a co-creator to whom 230 protections don’t apply, in which case “victims of this kind of content can potentially sue for any number of things,” Pinter said.

But the Grok story presents novel issues, according to New York–based attorney Carrie Goldberg, because it’s the first time that deepfake technology has been combined with an immediate publishing platform. “The frictionless publishing capability enables the deepfakes to spread at scale,” she said. “On top of that, we have the owner of X seemingly delighted by the trend of children and adults being stripped and humiliated on his platform.” The legal consequences could even extend to Apple’s App Store and Google Play, which Goldberg said might be “on the hook if they are sued in their capacity as distributors of products that are not reasonably safe.”

Pinter said she hopes this saga will force Congress to finally establish meaningful legal guardrails around Big Tech. “Most industries are either regulated by laws and fines that restrict them—or they fear liability… and so they curb their activities, they make their product safe,” she said. “Big Tech doesn’t have those concerns. This is the result. You give an industry complete freedom from regulation, complete freedom from liability, and this is what you see.”

 

What I’m Reading…

One of the largest sources of A.I.-related misconceptions stems from people talking about the technology as if it has human attributes. Emily Bender, for one, is “swimming upstream” against this anthropomorphism, which is often pushed by the tech companies themselves. [Tech Policy Press]

We’ve all read the studies about how generative A.I. could harm our ability to think critically. But this piece offers more of an observation: that the nature of how we interact with the tech “is inverting the order of human thought.” I’m not a psychologist, but that doesn’t sound good. [Psychology Today]

ChatGPT, despite its well-documented capacity to fail in surprising ways, has been used for years as both a digital doctor and a health advocate. Yesterday, OpenAI codified a push to make ChatGPT a full-on healthcare hub, launching ChatGPT Health (and asking users for all sorts of personal data, naturally). [Fortune]

Law professor Margaret Hu connects the dots between Trump’s actions in Venezuela and the A.I. arms race. It’s about more than rare earth minerals. [A.I. Law and Policy]

 

That’s all for today. I’ll see you next week.

Ian

The Powers That Be

Join Emmy Award-winning journalist Peter Hamby, along with the team of expert journalists at Puck, as they let you in on the conversations insiders are having across the four corners of power in America: Wall Street, Washington, Silicon Valley, and Hollywood. Presented in partnership with Audacy, new episodes publish daily, Monday through Friday.

The Best & The Brightest

Puck’s daily political newsletter from Washington on what’s really happening in this town, from the White House to the Pentagon to Capitol Hill, K Street, and the campaign trail.

Puck
Facebook Twitter Instagram LinkedIn

Need help? Review our FAQ page or contact us for assistance. For brand partnerships, email ads@puck.news.

You received this email because you signed up to receive emails from Puck, or as part of your Puck account associated with {{customer.email}}. To stop receiving this newsletter and/or manage all your email preferences, click here.

 

Puck is published by Heat Media LLC. 107 Greenwich St., New York, NY 10006

SHARE
Try Puck for free

Sign up today to join the inside conversation at the nexus of Wall Street, Washington, A.I., Hollywood, and more.

Already a member? Log In


  • Daily articles and breaking news
  • Personal emails directly from our authors
  • Gift subscriber-only stories to friends & family
  • Unlimited access to archives

  • Exclusive bonus days of select newsletters
  • Exclusive access to Puck merch
  • Early bird access to new editorial and product features
  • Invitations to private conference calls with Puck authors

Exclusive to Inner Circle only



Latest Articles

MELANIA documentary
Matthew Belloni • January 8, 2026
Can ‘Melania’ Open?
On top of the $40 million Amazon ponied up for Brett Ratner’s docu-hagiography, the studio is spending another $35 million to open it in 27 countries, including a splashy Kennedy Center premiere to be attended by top executives. But for all the expense, Melania is for an audience of one.
Darian Mensah duke college football
John Ourand & Eriq Gardner • January 8, 2026
The People v. Darian Mensah
Assessing Duke’s epic lawsuit and a full slate of other football-related cases approaching their day in court with Eriq Gardner, Puck’s resident legal expert.
Rachna Shah and Renee Barletta met gala
Lauren Sherman • January 8, 2026
A Met Gala P.R. Switcheroo & LVMH’s Watch Week
News and notes on a Met Gala P.R. shake-up, Tamara Mellon’s bid to buy back Jimmy Choo, and the state of LVMH’s watch business.


Adam Baidawi
Lauren Sherman • January 8, 2026
GQ’s Man of the Year
The chatter inside Condé Nast is that Adam Baidawi is winning the horse race to helm GQ’s global operations. But is it actually sealed up?
Donald Trump
Julia Ioffe • January 8, 2026
The Greenland Mile
After claiming the “framework of a deal” to expand America’s presence on the world’s largest island, Trump has dropped his threats to invade Greenland. Thank God, because a direct assault on Greenland wasn’t going to be a cakewalk.
Sam Altman
Ian Krietzberg • January 8, 2026
Sam Altman’s Mad Men Era
It was inevitable that OpenAI, a massive consumer-facing company racking up historic losses, would enter the advertising business. Will this become the new normal for the industry? Or will ChatGPT users revolt?


Donald Trump
Leigh Ann Caldwell • January 8, 2026
Trump’s G.O.P. Greenlanditis
With his Davos speech, the president reassured jittery Republicans that invading Greenland is, for now, off the table. But conversations on the Hill have escalated, as even Trump’s G.O.P. allies warn that any move that blows up NATO could end his midterm hopes—and lead to impeachment, too.


Get access to this story

Enter your email for a free preview of Puck’s full offering, including exclusive articles, private emails from authors, and more.

Verify your email and sign in by clicking the link we just sent.

Already a member? Log In


Start 14 Day Free Trial for Unlimited Access Instead →



Latest Articles

Bari Weiss
Dylan Byers • January 8, 2026
Bari’s Prison of Her Own Design
After a month of contentious delays, 60 Minutes finally aired its piece on the notorious El Salvador prison CECOT. The “hostage standoff,” as one person put it, ended in an uneasy truce that could have been reached a month ago—and without exposing the distrust and division at Bari Weiss’s CBS News.
Jonathan Anderson dior 2026
Lauren Sherman & Rachel Strugatz • January 8, 2026
Paris Men’s FW26 Trends & Harry’s Le Labo Dupe
News and notes on the biggest trends out of Paris Menswear Fashion Week; former i-D editor Alastair McKimm’s new magazine venture; and Harry’s new TikTok-exclusive, scent-dupe body wash series.
Pat McGrath
Rachel Strugatz • January 8, 2026
Pat McGrath Going Once, Going Twice…
It wasn’t so long ago that the namesake beauty line of the fashion industry’s go-to makeup artist was a market leader, with a frothy valuation to match. Next week, it will hit the auction block. What went wrong? And can it be resurrected?


Sotheby's Klimt
Marion Maneker • January 8, 2026
The Hot 50: Our Semiannual Market Temp Check
An excavation of the art market’s robust performance in the second half of 2025, with the latest (and greatest) data from ARTDAI. As you’ll see, the market is healthier and more varied than ever.
Geoffroy van Raemdonck
William D. Cohan • January 8, 2026
The Saks Financial Colonoscopy
Amid a torrent of bankruptcy filings, a blunt declaration by Saks Global’s newly appointed chief restructuring officer lays out precisely what went wrong and when, and who got screwed hardest—plus which risk-hungry investors are likely to call the shots moving forward. As it turns out, the company’s capital structure became “unsustainable” almost immediately after its $2.7 billion acquisition of Neiman Marcus Group in December 2024.
Melanie Ward
Lauren Sherman • January 8, 2026
Milano Menswear Reflections & A Melanie Ward Tribute
News and notes on a thoughtful tribute to the late stylist Melanie Ward, the sudden omnipresence of peptides, and a somewhat emaciated men’s fashion week in Milan.


Bartolomeo Rongone
Lauren Sherman & Sarah Shapiro • January 8, 2026
Moncler’s New Boss & Chanel’s Golden Globes Halo
News and notes on Bartolomeo Rongone’s new assignment as the C.E.O. of Moncler Group, the renewed fanfare around a beloved Valentino documentary following the great designer’s passing, and Chanel’s Golden Globes brand-awareness bump.
Get access to this story

Enter your email to get access to one article and free previews of our private emails from Puck authors and editors.

OR

Already a Member? Sign in



Latest Articles

Brian Roberts
Julia Alexander • January 8, 2026
NBC’s Golden Ratio
A partnership with Nippon TV will give NBC access to new technology meant to optimize its sports content for younger audiences. It’s a timely play—but one that also belies Peacock’s larger problem with viewer engagement.
Amber Venz Box
Sarah Shapiro • January 8, 2026
How to Win Influencers and Friend People
With a $2 billion valuation and first-mover advantage, LTK has long been the gold standard in influencer affiliate marketing. But as competition from ShopMy and others heats up, the O.G. company has had to do more to attract and retain users—like sharing some of its previously well-guarded data.
ICE protest
Peter Hamby • January 8, 2026
Inside the Democratic ICE Storm
A remarkably candid conversation with Adam Jentleson, the founder and president of the Searchlight Institute, about the rhetorical fight over abolishing ICE that’s raging inside the Democratic Party.


Dario Amodei
Ian Krietzberg • January 8, 2026
Claude Code & Theory
A new wave of A.I. coding tools are impressive and empowering enough to make one imagine a future where we’re all coding our own apps and software engineers are a thing of the past. But these days, it still takes a pro (or armies of them) to get it right.
White Cube Gallery New York
Marion Maneker • January 8, 2026
Dye Hard & Humeau’s Bat Cave
Fresh from their holiday hibernation, New York galleries are once again buzzing with crowded openings and legendary works from the likes of Humeau, Pousette-Dart, Eggleston, and Flavin.
Ted Sarandos
Matthew Belloni • January 8, 2026
Movie Theaters Want a Ted Sarandos Blood Oath
Regal’s Eduardo Acuna goes public with his pitch for Netflix to sign a 10-year binding pledge with the Trump D.O.J. (and other ideas), ensuring Sarandos won’t go back on his recent promise to give Warner Bros. movies a 45-day window. Offering Greta Gerwig’s ‘Narnia’ a wide release would help, too.


Amy Klobuchar
Abby Livingston • January 8, 2026
Klobuchar’s Minnesota Succession Mess
Two days before the killing of Renee Good, news leaked that Senator Klobuchar was weighing a bid to succeed Tim Walz as governor of Minnesota. But while the chatter about Klobuchar has receded from the headlines, Democrats are quietly discussing the political impact of a second open Senate seat in 2026.


  • Terms
  • Privacy
  • Contact
  • FAQ
  • Careers
© 2026 Heat Media All rights reserved.
Create an account

Already a member? Log In

CREATE AN ACCOUNT with Google
CREATE AN ACCOUNT with Google
OR YOUR EMAIL

OR

Use Email & Password Instead

USE EMAIL & PASSWORD
Password strength:

OR

Use Another Sign-Up Method

Become a member

All of the insider knowledge from our top tier authors, in your inbox.

Create an account

Already a member? Log In

Verify your email!

You should receive a link to log in at .

I DID NOT RECEIVE A LINK

Didn't get an email? Check your spam folder and confirm the spelling of your email, and try again. If you continue to have trouble, reach out to fritz@puck.news.

CREATE AN ACCOUNT with Google
CREATE AN ACCOUNT with Google
CREATE AN ACCOUNT with Apple
CREATE AN ACCOUNT with Apple
OR USE EMAIL & PASSWORD
Password strength:

OR
Log In

Not a member yet? Sign up today

Log in with Google
Log in with Google
Log in with Apple
Log in with Apple
OR USE EMAIL & PASSWORD
Don't have a password or need to reset it?

OR
Verify Account

Verify your email!

You should receive a link to log in at .

I DID NOT RECEIVE A LINK

Didn't get an email? Check your spam folder and confirm the spelling of your email, and try again. If you continue to have trouble, reach out to fritz@puck.news.

YOUR EMAIL

Use a different sign in option instead

Member Exclusive

Get access to this story

Create a free account to preview Puck’s full offering, including exclusive articles, private emails from authors, and more.

Already a member? Sign in

Free article unlocked!

You are logged into a free account as unknown@example.com

ENJOY 1 FREE ARTICLE EACH MONTH

Subscribe today to join the inside conversation at the nexus of Wall Street, Washington, A.I., Hollywood, and more.

START 14-DAY FREE TRIAL

  • Daily articles and breaking news
  • Personal emails directly from our authors
  • Gift subscriber-only stories to friends & family
  • Unlimited access to archives
  • Bookmark articles to create a Reading List
  • Quarterly calls with industry experts from the power corners we cover