In this week's issue:
- Elon Musk admitting under oath that xAI used OpenAI's own models to build Grok — while simultaneously suing OpenAI for $130 billion
- The U.S. Army proposing a 3-gigawatt data center at Fort Bliss that would consume more electricity than all of El Paso
- Five Austin council members lining up to kill $142 million in IT savings while the city stares at a $26 million deficit
- Infowars physically locked and dark after 27 years in Austin
Rock and roll.
Top Stories
- Five council members appear set to block Austin's best shot at closing its $26M deficit. Siegel, Fuentes, Velasquez, Ellis, and Qadri appear to have the votes to kill the ONE-ATS IT consolidation — a plan city staff projects would save $49M–$142M annually — with the deciding vote likely coming at next week's May 5 work session.
- UPDATE: Five Waymo robotaxis — not one — blocked first responders during the March 1 mass shooting. Austin and San Francisco first responders have now formally notified NHTSA, documenting a pattern of regression; Waymo skipped Austin's public safety meeting again.
- UPDATE: Travis County judge grants full temporary injunction blocking Texas's new smokable hemp regulations. The $10 billion Texas hemp industry stays open while litigation continues, with the injunction also freezing the sharply higher licensing fees that threatened to wipe out hundreds of retailers.
- Over 13% of all Austin 2026 building permits are concentrated in a single zip code: 78744. The southeast corridor is driving a massive residential buildout toward Lockhart, where SpaceX's presence is fueling housing demand at a pace where whole neighborhoods are going up in weeks.
- Austin-based AI startup Dreambase raised a $3.7M seed round led by Felicis Ventures. The company builds AI-powered analytics for the Supabase/Postgres developer ecosystem — exactly the kind of infrastructure-layer AI Austin is increasingly known for producing.
- All five people aboard a Cessna 421C were killed when it crashed in Wimberley Thursday night. The crash occurred around 11:05 PM approximately 40 miles southwest of Austin; the FAA and NTSB have been notified and are investigating.
Musk Admits xAI Distilled OpenAI Models — The Trial That Could Reshape Austin's AI Economy
The most combustible tech trial in a decade is playing out in Oakland, and Austin has skin in it. Elon Musk v. OpenAI opened April 28 in the US District Court for the Northern District of California before Judge Yvonne Gonzalez Rogers, with a nine-person advisory jury and a four-week expected run. Musk is suing OpenAI, Sam Altman, Greg Brockman, and Microsoft for $130–134 billion in damages, alleging OpenAI betrayed its founding nonprofit mission when it converted to a for-profit structure. On Day 3, the judge asked whether xAI used distillation techniques on OpenAI's models to train Grok. Musk's response, under oath: "Generally AI companies distill other AI companies." Pressed further, he said: "Partly." He framed it as "standard practice to use other AIs to validate your AI." The irony writes itself — Musk is simultaneously suing OpenAI for mission drift while his own company used their technology as a shortcut. He also ranked the world's AI companies from the stand, placing Anthropic first, OpenAI second, Google third, and Chinese open-source models fourth. He described xAI as "a much smaller company with just a few hundred employees" relative to rivals. The judge, for her part, scolded Musk on day one for posting about the case on X and threatened a gag order. OpenAI's defense: the lawsuit is "based on jealousy and regret."
Why does this matter for Austin? xAI is headquartered in Austin, and its fate is directly tied to the SpaceX IPO, which is now the biggest financial event on the horizon for this city's tech economy. SpaceX acquired xAI in an all-stock deal completed in April 2026 at a combined valuation of $1.25 trillion. SpaceX filed confidentially for IPO in early April, targeting as early as June 2026 at a potential $1.75 trillion valuation — which would be the largest IPO in human history, eclipsing Saudi Aramco's 2019 record. xAI burns roughly $1 billion per month and has three compute campuses in Memphis approaching 2 gigawatts total capacity. The trial outcome — and whether the distillation admission strengthens or muddies Musk's claims — will directly affect xAI's valuation narrative heading into that offering. Greg Brockman's 2017 diary entry, surfaced in the proceedings, captures the founding tension perfectly: "This is the only chance we have to get out from Elon." Whatever the verdict, the trial is producing a clearer picture of how the AI industry actually competes — through distillation, capability races, and IP ambiguity — and Austin's most consequential company is at the center of it.
Sources: TechCrunch, CNN, BNN Bloomberg, Ars Technica, Yahoo Finance, The Crypto Times
Upcoming Events
- Wrong Turn Bicycle Race. Today (May 2), 7:30 AM–6:30 PM — city-wide route impacts; plan accordingly if you're driving downtown.
- Cinco de Mayo Festival. This weekend (May 2–3) across Austin — expect closures and street activity citywide; check Austin Transportation for route impacts.
- Austin FC vs. St. Louis City SC. Sunday, May 3 at Q2 Stadium, 5:30 PM — MLS regular season action with stadium traffic affecting the Q2 corridor.
- Austin Sunshine Run. Sunday, May 3 — road race through Austin; expect lane closures and rolling course impacts in affected neighborhoods.
- Austin Psych Fest 2026. May 8–10 at The Far Out Lounge — headlined by The Flaming Lips, Ty Segall, and Thee Sacred Souls; the biggest independent music event on Austin's calendar this month, with early tiers nearly sold out.
- Rich Vos at Comedy Mothership. Tonight (May 2), 10:00 PM in the Fat Man room — Joe Rogan's South Congress venue hosts the veteran stand-up for a late-night set.
Fort Bliss's 3-Gigawatt Data Center: The U.S. Military Just Bet Texas Is the Hardware Layer of AI
The U.S. Army has conditionally selected the Carlyle Group — a private equity firm managing $477 billion in assets — to build and operate a 3-gigawatt data center complex on 1,384 acres at Fort Bliss in El Paso. The project is enabled by a Trump executive order directing federal agencies to accelerate AI infrastructure buildout on military land. The Army is targeting 100 megawatts of compute capacity by 2027 and the full 3 gigawatts by 2029, with natural gas combined-cycle turbines as the most likely power source. No formal contract exists yet — the parties are in exclusive negotiations — but the scale of what's being proposed is staggering: a single facility that would require more electricity than El Paso Electric's entire grid currently generates. El Paso Electric's total generation capacity is 2.9 gigawatts across its full Texas-New Mexico service territory; its peak demand on record is just over 2.3 gigawatts. This one data center would consume every electron the regional utility can produce and then some. The plan is effectively to build a private power plant alongside the data center — the Army openly describes natural gas turbines as "most likely" — which is the same conclusion Oracle and OpenAI reached for their $165 billion Project Jupiter campus nearby: generate your own power rather than ask a utility to keep up.
The Fort Bliss proposal is the clearest statement yet that Texas is where serious AI compute infrastructure lands — and it extends that thesis from Austin's private sector (Samsung Taylor, Oracle Lady Bird Lake, Galaxy Digital/CoreWeave) into the federal-military dimension. The El Paso region is quietly assembling an AI infrastructure cluster with no parallel in the country: Meta's $10 billion facility in northeast El Paso, Oracle and OpenAI's $165 billion Project Jupiter in nearby Santa Teresa, NM, and now a potentially 3-gigawatt Army complex driven by private capital with a DoD security overlay. The Carlyle model — lease federal land, build and operate for commercial use, carve out a secure slice for military workloads — is a novel public-private structure that could get replicated across every major military installation in the country. The Army has already named Fort Hood, near Killeen in Central Texas, as a potential next site. Fort Hood sits squarely inside ERCOT territory. If a facility anything like Fort Bliss gets proposed for Central Texas, it becomes an Austin story with direct grid, labor, and economic consequence — and based on the trajectory, that conversation is coming.
Sources: AP News, KVUE/AP, KFOX14
Weird Austin
- Infowars is physically locked and dark — the final act. A court-appointed receiver stopped paying rent and utilities, forcing Jones and staff out by midnight May 1, ending 27 years of Austin-based broadcasting — while The Onion's $81K/month deal to buy and rebrand it as satire sits frozen by a Texas appeals court and the legal ownership remains in limbo.
- Buenos Aires Café just turned 20 on East 6th Street. The Argentine empanada-and-lomito institution has outlasted two full decades of East 6th redevelopment — a quiet miracle of independent hospitality in a corridor that reinvents itself every three years.
- Austin breweries swept four medals — including two golds — at the 2026 World Beer Cup. Pinthouse Brewing and Austin Beer Garden Brewing Co. took golds in Imperial IPA and Honey Beer; Zilker Brewing earned silver in the Juicy/Hazy IPA category, arguably the most brutally competitive style in the competition.
One Thing
Musk is in a California courtroom admitting he borrowed from OpenAI. The Army is wiring 3 gigawatts into Texas military land. Everyone is arriving at the same conclusion: Texas is where the compute goes. Austin is already inside that story.
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