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

In a bold move, Elon Musk's xAI has initiated a federal lawsuit targeting both Apple and OpenAI. The complaint, lodged in Texas, accuses these tech powerhouses of unlawfully collaborating to suppress competition within the artificial intelligence sector. The lawsuit argues that Apple's integration of OpenAI's chatbot into its mobile operating systems constitutes an exclusive deal that breaches competition laws. This legal action follows previous threats from Musk, who contends that the partnership has effectively 'locked up' markets, hindering new entrants like xAI from competing. Seeking billions in damages, the lawsuit emphasizes that there is 'no valid business rationale' for the exclusivity of the Apple-OpenAI agreement. Central to the allegations is the assertion that this partnership has unfairly favored OpenAI’s ChatGPT app within the App Store, limiting the growth of rival chatbots and granting OpenAI access to the data of millions of Apple users. According to the filing, this arrangement has 'foreclosed competition among generative AI chatbots' and diminished innovation and quality, allowing OpenAI to maintain a significant 80% share of the generative AI market while Apple holds 65% of the U.S. smartphone market. In a statement on his social media platform, Musk highlighted the lawsuit's claims, pointing out that despite Grok receiving excellent reviews, Apple has not recognized it in its listings. In response, an OpenAI representative dismissed the lawsuit as part of Musk's ongoing 'pattern of harassment.' This legal dispute underscores the deteriorating relationship between Musk and OpenAI CEO Sam Altman, co-founders of the AI firm in 2015, who have since turned into rivals. Musk has accused Altman of straying from OpenAI's original non-profit mission, a point of contention as Musk launches his own AI ventures to compete directly. While the lawsuit paints a picture of a stronghold partnership, Apple has defended its App Store practices as 'fair and free of bias.' Notably, rival chatbots like DeepSeek and Perplexity have occasionally climbed the App Store charts. Reports also suggest that Apple is exploring collaborations with Google to utilize the Gemini chatbot for Siri, further complicating the competitive landscape. Nevertheless, legal experts not involved in the case have indicated that Apple’s market dominance could lend credence to xAI's claims of illegal market manipulation.