Elon Musk's xAI sues Apple and OpenAI, claims billions in damages over illegal AI monopoly

Elon Musk's xAI has filed a federal lawsuit against Apple and OpenAI, accusing the tech giants of illegally conspiring to stifle competition in the artificial intelligence market. The suit, filed in Texas, alleges that Apple's decision to integrate OpenAI's chatbot into its smartphone operating systems is an exclusive arrangement that violates competition law.

The lawsuit, which makes good on a threat Musk issued earlier this month, claims the partnership has "locked up markets to maintain their monopolies and prevent innovators like X and xAI from competing." The filing seeks billions of dollars in alleged damages, arguing there is "no valid business reason for the Apple-OpenAI deal to be exclusive."

At the heart of the complaint is the claim that the 2024 arrangement has unfairly boosted OpenAI’s ChatGPT app in the App Store, deprived competing chatbots of scale, and given OpenAI access to the prompts and activity of millions of Apple customers. The lawsuit states that this "foreclosed competition among generative AI chatbots... and reduced quality and innovation," ultimately helping OpenAI maintain its roughly 80% control of the generative AI chatbot market and Apple its 65% share of the smartphone market in the US.

In a post on his social media platform X, Musk echoed the lawsuit's allegations, writing, "A million reviews with 4.9 average for @Grok and still Apple refuses to mention Grok on any lists."

In response, an OpenAI spokesperson stated the filing was "consistent with Mr. Musk's ongoing pattern of harassment."

The legal battle marks a new low in the relationship between Musk and OpenAI CEO Sam Altman, who co-founded the AI company in 2015. The two have since become bitter rivals, with Musk accusing Altman of abandoning OpenAI's original non-profit mission in the pursuit of profit. This rivalry has intensified as Musk launched his own AI firms, including xAI and its chatbot Grok, to compete directly with OpenAI.

While the lawsuit paints a picture of an impenetrable partnership, Apple has previously defended its App Store practices as "fair and free of bias," and several ChatGPT rivals like DeepSeek and Perplexity have topped its charts at various times. Furthermore, Apple was recently reported to be in talks with Google about using the Gemini chatbot to help power its voice assistant, Siri.

Despite this, some antitrust legal experts not involved in the case said that Apple’s dominant position in the smartphone market could bolster xAI's claims that the company is illegally tying its iPhone sales to OpenAI’s ChatGPT.