Elon Musk’s X Corp. is closing down its flagship office in San Francisco, although the new location for the office won’t be quite as far as Texas, as Musk had threatened last month.

In July, after California Governor Gavin Newsom enacted the SAFETY ACT, legislation designed to protect LGBTQ+ students, Musk announced that this was the “last straw” and X would soon be relocating to Texas. Today, X Chief Executive Linda Yaccarino said in an internal memo to staff that all Bay Area employees will be relocated not to Texas but to Silicon Valley – at a new office that will be built in Palo Alto, and an existing office in San Jose.

“This is an important decision that impacts many of you, but it is the right one for our company in the long term,” Yaccarino said in the missive obtained by the New York Times. The new Palo Alto office will focus on engineering, according to that report, and will be shared with members of Musk’s artificial intelligence startup, xAI.

X, formerly Twitter Inc., was founded in San Francisco in 2006 and had a mostly stress-free relationship with the city until Musk took over the company in 2022. Since then, the relationship between the company and the city has been somewhat embattled. X faced a lawsuit for unpaid rent that was later dismissed and the city opened an investigation into an allegation that offices had been turned into sleeping quarters.

Even so, Musk has defended the city in the past despite there being plenty of incentive to leave. “The city is in a doom spiral with one company after another left or leaving,” he tweeted last year. “Therefore, they expect X will move too. We will not. You only know who your real friends are when the chips are down. San Francisco, beautiful San Francisco, though others forsake you, we will always be your friend.”

He was alluding to the fact that there has of late been an exodus of big tech firms that have drastically cut office space in San Francisco. According to an article in the San Francisco Standard earlier this year, tech behemoths such as Meta Platforms Inc. Uber Technologies Inc., Airbnb Inc. and Dropbox Inc., have all shut down offices in the city.

Musk’s antipathy stretches to the entire state of California, from where he says he’ll soon be moving his SpaceX HQ. In 2021, he also moved the Tesla Motors Inc. HQ from California to Texas after calling the state’s lockdown rules “fascist.”

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