(Reuters) - Elon Musk's artificial intelligence startup xAI has introduced Grok-3, the latest iteration of its chatbot, as it looks to compete with Chinese AI firm DeepSeek, Microsoft ( MSFT )-backed OpenAI, and Alphabet's Google.

Grok-3 debut comes at a critical moment in the AI arms race, just days after DeepSeek unveiled its powerful open-source model and as Musk moves aggressively to expand xAI's influence.

The chatbot is being rolled out immediately to Premium+ subscribers on X, the social media platform owned by Musk. xAI is also launching a new subscription tier, SuperGrok, for users accessing the chatbot via its mobile app and Grok.com website.

"Grok-3 across the board is in a league of its own," Musk said during a livestream alongside three xAI engineers late on Monday, adding that the model significantly outperforms its predecessor, Grok-2.

Last week, a consortium of investors led by Musk offered$97.4 billion to acquire OpenAI's nonprofit assets, an offer the ChatGPT-maker rejected.

Musk on Monday reiterated xAI's commitment to open-source AI, saying earlier versions of Grok will be made publicly available once the latest model reaches full maturity. He expects Grok-3 to meet that benchmark in a few months.

The latest release introduces a smart search engine, called DeepSearch, which xAI describes as a reasoning-based chatbot capable of articulating its thought process when responding to user queries.

The tool, demonstrated during the livestream, offers functions for research, brainstorming, and data analysis.

As competition in AI intensifies, xAI is ramping up its data center capacity to train more advanced models. Bloomberg News reported last week the startup is in discussions to raise up to $10 billion in funding, which could value the company at around $75 billion.

(Reporting by Surbhi Misra in Bengaluru; Editing by Arun Koyyur)