xAI employees were told by the company's attorney, James Burnham, that interactions with employees at Cursor should be limited.

Burnham emailed guidelines to all xAI staffers last week noting that conversations with Cursor employees "should not extend beyond what is necessary to implement a technical partnership,” sources familiar with the situation told Bloomberg.

Last month, it was announced that Elon Musk's SpaceX had secured an option to either acquire Cursor for $60 billion later this year or enter a $10 billion partnership. 

The potential deal could strengthen xAI, which merged with SpaceX earlier this year and develops Grok. The company has so far trailed rivals in AI-powered coding tools.

“The combination of Cursor’s leading product and distribution to expert software engineers with SpaceX’s million H100 equivalent Colossus training supercomputer will allow us to build the world’s most useful models,” the company wrote.

xAI's general counsel noted that employees could have their conversations subpoenaed as part of the regulatory process.

Antitrust “gun-jumping” occurs when merging or acquiring companies prematurely coordinate business operations, exchange sensitive competitive data, or transfer operational control before a proposed transaction receives official government regulatory clearance.

Because the law treats merging companies as independent competitors until a deal officially closes, regulators heavily police pre-closing conduct to prevent anticompetitive market manipulation. Companies that violate these terms are subject to financial penalties or delays in closing deals.

Under the terms disclosed in a securities filing last week, SpaceX can purchase the company within a 30-day window following the rocket maker's public listing. Until then, xAI and Cursor are legally separate entities and must operate independently of each other until xAI agrees to buy the company and the acquisition process receives regulatory approval.

These guidelines come a bit late, as Cursor employees have already started working out of the xAI offices. Cursor's staffers are collaborating on projects alongside xAI engineers related to the partnership agreement. xAI engineers have been permitted to share code and data for model training but are prohibited from using Cusor's technology for anything unrelated to the joint model, Bloomberg noted.

Employees are also permitted to use intellectual property from Cursor or xAI, including the chatbot Gork, but the same rules apply; it must only be for use in the joint project.

SpaceX filed for its long-awaited initial public offering Wednesday, bringing Musk’s rocket, satellite and artificial intelligence company closer to what could be the largest IPO in market history.

The company is expected to list on Nasdaq under the ticker SPCX, with Reuters reporting that SpaceX could begin its roadshow on June 4, price the offering as soon as June 11, and start trading as early as June 12, according to Yahoo Finance and Reuters.

SpaceX is aiming to raise about $75 billion at a valuation near $1.75 trillion, Reuters reported, a level that would make the deal the largest stock-market flotation ever.

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