Elon Musk’s xAI said late Wednesday that Grok will no longer be able to create sexualized images of real people on its social network X based on user prompts following weeks of consumer and political backlash and regulatory investigations.

“We have implemented technological measures to prevent the Grok account from allowing the editing of images of real people in revealing clothing such as bikinis,” xAI wrote in a post shared via the X Safety account on the site formally known as Twitter. “This restriction applies to all users, including paid subscribers.”

The announcement comes hours after California Attorney General Rob Bonta said his office is investigating xAI, which is headquartered in Silicon Valley, over its apparent “large-scale production of deepfake nonconsensual intimate images.”

California Governor Gavin Newsom, who has often been a proponent for Musk and his companies, said in a post on X Wednesday morning, “xAI’s decision to create and host a breeding ground for predators to spread nonconsensual sexually explicit AI deepfakes, including images that digitally undress children, is vile.”

In recent weeks, probes were announced in India, Malaysia, Indonesia, Ireland, the U.K., France and Australia, and by the European Commission. Indonesia and Malaysia have both issued a temporary ban on Grok.

Those announcements came amid widespread criticism that Grok had enabled X users to easily generate sexual and violent images based on real photos of people on the social network through simple text-based prompts.

In the U.S., three Democratic senators have called on Apple and Google to remove the X and Grok apps from their app stores until the company makes changes to prevent easy creation of nonconsensual explicit images.

Musk’s company also said, in the post on Wednesday, that image creation editing through Grok on X will only be available to paid subscribers.

Earlier on Wednesday, Musk dared his followers on X to “break Grok image moderation.” He said that, “With NSFW enabled, Grok is supposed allow upper body nudity of imaginary adult humans (not real ones),” and compared such content to what’s seen in R-rated movies. Grok settings, he noted, would also “vary in other regions according to the laws on a country by country basis.”

WATCH: California attorney general launches investigation into xAI, Grok

In a regulatory filing out Friday, Elon Musk-led automaker Tesla announced a change to its corporate bylaws that will limit shareholders ability to sue the company if investors believe the company’s board or executives committed any breach of fiduciary duties.

The filing says the new bylaw went into effect as of May 15, and that Tesla has adopted “an ownership threshold requiring any shareholder or group of shareholders to hold shares of common stock sufficient to meet an ownership threshold of at least 3% of Tesla’s issued and outstanding shares in order to institute or maintain a derivative proceeding.”

Tesla’s current market cap stands over $1 trillion. A 3% stake of common stock and all outstanding shares would be worth more than 30 billion dollars.

Tesla did not immediately respond to a request for comment on the change to its bylaws.

According to Ann Lipton, an experienced corporate and securities law trial attorney who now teaches at Tulane Law School, the company is taking advantage of a Texas state law that allows corporations to limit shareholder lawsuits against insiders for breach of fiduciary duty. The law permits companies that are incorporated in Texas, as Tesla is currently, to require a shareholder to own 3% before bringing a claim. 

“Obviously, for a company of Tesla’s size, that would be a formidable barrier to anyone bringing a lawsuit for breach of fiduciary duty,” she said in an email.

By comparison, when Tesla was incorporated in Delaware, a shareholder who held just nine shares of Tesla stock was the plaintiff in a shareholder derivative suit that resulted in a judge ordering CEO Elon Musk’s 2018 CEO compensation package to be rescinded, Lipton noted.

Delaware Chancery Court Chancellor Kathaleen McCormick found that Musk, rather than Tesla’s board, had controlled the company and that the board’s compensation committee misled shareholders before seeking a vote to approve that pay plan. They also failed to negotiate with Musk over the terms of the deal, instead working “alongside him, almost as an advisory body,” the judge ruled.

The Tornetta decision, named after Tesla shareholder Richard Tornetta who brought the suit, prompted Musk to say, “Never incorporate your company in the state of Delaware.” Tesla moved its site of incorporation to Texas in June 2024 after attaining shareholders’ approval to do so after that loss in court.

Tesla has since appealed the Tornetta decision and Delaware’s state supreme court will decide if Musk can keep the shares granted to him through the 2018 CEO pay plan or not. That pay plan had been worth around $56 billion.

OpenAI’s board of directors said Friday that Sam Altman will step down as CEO and will be replaced on an interim basis by technology chief Mira Murati.

The company said it conducted “a deliberative review process” and “concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”

“The board no longer has confidence in his ability to continue leading OpenAI,” the statement said.

OpenAI’s board includes chief scientist Ilya Sutskever and independent directors such as Quora CEO Adam D’Angelo, technology entrepreneur Tasha McCauley, and Helen Toner of the Georgetown Center for Security and Emerging Technology. OpenAI says the board of its 501(c)(3) is the “overall governing body for all OpenAI activities.”

The board also said that Greg Brockman, OpenAI’s president, “will be stepping down as chairman of the board and will remain in his role at the company, reporting to the CEO.”

Sam Altman acknowledged that he was leaving OpenAI in a post on X on Friday, but did not mention any accusations by the firm’s board that he failed to be candid during unspecified reviews. He said he loved working at the company and that he would talk more about “what’s next later.”

Regarding the appointment of Murati, Open AI said, “As the leader of the company’s research, product, and safety functions, Mira is exceptionally qualified to step into the role of interim CEO. We have the utmost confidence in her ability to lead OpenAI during this transition period.”

OpenAI, which has raised billions of dollars from Microsoft and ranked first on CNBC’s Disruptor 50 list this year, jumped into the mainstream in late 2022 after releasing its AI chatbot ChatGPT to the public. The service went viral by allowing users to convert simple text into creative conversation and has pushed big tech companies such as Alphabet and Meta to step up their investments in generative AI.

Microsoft shares slipped after the announcement, closing the day down 1.7% at $369.84.

A Microsoft spokesperson said in a statement that the company has “a long-term partnership with OpenAI and Microsoft remains committed to Mira and their team as we bring this next era of AI to our customers.”

In a post on X, Microsoft CEO Satya Nadella commented about his company’s “long-term agreement with OpenAI,” explaining that it would “remain committed to our partnership, and to Mira and the team.” Nadella did not address Altman’s departure.

Brockman also shared a post on X that included the message he sent to his former OpenAI colleagues, informing them that he “quit” after he learned about “today’s news.”

Later in the evening, Brockman said in an X post that both he and Altman were “shocked and saddened by what the board did today.”

Sutskever instigated a virtual meeting with Altman that the rest of the OpenAI board attended except Brockman, the now-former OpenAI president claimed in the X post. It was during this meeting that Sutskever allegedly fired Altman, telling him “that the news was going out very soon,” Brockman wrote.

Less than half-an-hour later, Brockman claimed to have received a text message from Sutskever, in which the chief scientist summoned for another virtual meeting. At this meeting, Brockman said he learned of Altman’s firing and that he was being removed from OpenAI’s board.

“As far as we know, the management team was made aware of this shortly after, other than Mira who found out the night prior,” Brockman said in the post, which was quickly followed by a message from Altman.

Altman said in an X post that “today was a weird experience in many ways. but one unexpected one is that it has been sorta like reading your own eulogy while you’re still alive.”

“if i start going off, the openai board should go after me for the full value of my shares,” Altman said in another X post.

“I think if this technology goes wrong, it can go quite wrong,” Altman said at the time. “And we want to be vocal about that. We want to work with the government to prevent that from happening.”

In a prelude to his Senate testimony, Altman also spoke at a dinner with roughly 60 lawmakers, who were reportedly wowed by his speech and demonstrations.

“It’s not easy to keep members of Congress rapt for close to two hours,” said Rep. Ted Lieu, D-Calif., vice chair of the House Democratic Caucus, who co-hosted the dinner with GOP Conference Vice Chair Mike Johnson, R-La., now House speaker. “So Sam Altman was very informative and provided a lot of information.”

More recently, Altman spoke this week at the Asia-Pacific Economic Cooperation conference in San Francisco, along with various technology executives and world leaders including U.S. President Joe Biden and Chinese President Xi Jinping.

OpenAI held its first developer conference in early November, underscoring the startup’s rising popularity in the technology industry. Microsoft CEO Satya Nadella made a surprise guest appearance during the event, joining Altman on stage to discuss the startup’s AI technologies and its partnership with Microsoft.

Altman didn’t immediately respond to a request for more information.

— CNBC’s Lora Kolodny contributed to this report.

WATCH: OpenAI says Altman exiting as CEO

Users of X, formerly known as Twitter, will no longer be able to block comments from unwanted followers, according to a post by X owner Elon Musk on Friday, eliminating what’s long been viewed as a key safety feature. Blocking will only be available for direct messages, he said.

“Block is going to be deleted as a ‘feature’, except for DMs,” Musk wrote Friday. He was responding to a post from the account of Tesla Owners Silicon Valley, asking, “Is there ever a reason to block vs mute someone?” The group behind that account promotes the electric car company, where Musk is CEO.

Since acquiring Twitter last year for $44 billion, Musk has overhauled the company, laying off many employees, reinstating previously banned accounts and recently rebranding the company and platform as X. He didn’t provide a reason or a time frame for eliminating the block function, only saying in a follow-up response that “it makes no sense” and that the mute function will still be available.

Users have been able to use the block function to make sure that hateful content and harassment doesn’t show up in their feed in response to their posts. The mute feature just keeps the individual user from seeing the undesired responses, but doesn’t eliminate them from others’ feeds.

Twitter users have also long employed the block feature in boycotts and to avoid seeing ads from specific brands or promoters on the platform.

Binance CEO Changpeng Zhao, an investor in the new Twitter alongside Musk, said in a post that the company should focus its attention elsewhere.

“X should really solve the bots & spam problems before removing blocks,” wrote Zhao, whose company owns one of the world’s largest crypto exchanges. “Just my 0.02.”

Louis Jones, a longtime media and advertising executive who now works at the Brand Safety Institute, said Musk’s latest plan is very concerning as users could be inundated with spam, threats and other harmful content.

Musk’s “lax approach to free speech,” is likely to have a “double effect,” making bullying more common on the platform and inhibiting free speech by those users who are targets of bullies and predators, Jones wrote in an email to CNBC. “It’s a downward spiral that cannot be good for the long term success of X.”

— CNBC’s Lora Kolodny contributed to this report.

WATCH: Elon Musk is posting incessantly to distract focus from his business