The long answer is that the Xeno do not fight directly, rather they compete for resources, including planets, and anomalies.
One thing that's particularly noteworthy about this competition for planets: The more systems that a Xeno species holds, the faster it levels up.
For example, in my current game on The Garden map, the Jyeeta have managed to grab 25 systems, at the expense of the Xytox who have only got 15. In 17.25AE, the Xytox are only at Level 43, while the Jyeeta are at Level 57.
Last Edit: Mar 12, 2016 18:14:04 GMT -5 by elwoodps
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The AI is fairly complex with a number of separate pieces. As I recall, there's a separate AI's for each species of Xeno, regional/planetary AIs and even ship AIs. All these separate AIs can lead to Emergent Behavior, that looks intentional and centrally controlled but is really the result of simpler rules. The best example of Emergent Behavior is birds flying in a flock, it looks like they have a plan, but it can be simulated on a computer with a few simple rules for each virtual bird. There've been some great threads on the AIs, worth a read if they can be dug up.
Maybe what you're observing is just two AI's both trying to take over your systems.
Last Edit: Aug 10, 2016 12:29:01 GMT -5 by tenbsmith
Listen,Ive got a theory of the the Xenos,look at the number of Xeno species,then look at the number of Human Factions,them loom at the designs of their ships,the basic Mass Driver and Hypersonic ship looks alike,and although World Killers and Colony ships look different,look at your own aresenal,Battlecruisers and fighters of Cadar and Rychart look alike,although Clan Mesa and Hyperion ships look different,and although Xeno compete not fight,it is safe to assume that the Xenos species are in fact different factions,and part of the same Species,now...if only we can find their version of a Templar...