Musk’s xAI sues Apple and OpenAI over alleged iPhone AI monopoly

Elon Musk’s artificial intelligence (AI) company xAI sued Apple and OpenAI on Monday, claiming their partnership creates an illegal monopoly that blocks competitors from reaching iPhone users.

The lawsuit filed in a Texas federal court seeks billions in damages. xAI argues that Apple’s decision to make ChatGPT the default AI assistant on iPhones gives OpenAI unfair access to user data.

“Apple and OpenAI have locked up markets to maintain their monopolies and prevent innovators like X and xAI from competing,” the complaint states.

The case centers on Apple’s 2024 deal with OpenAI. This partnership enabled ChatGPT to be built directly into iPhones, iPads, and Mac computers through Apple’s Intelligence features. Users can access ChatGPT through Siri and other Apple apps without needing to download separate software.

Musk’s companies claim this exclusive arrangement harms competition. While other AI apps can be downloaded from the App Store, they lack the same deep integration with Apple’s operating system.

The lawsuit also accuses Apple of manipulating App Store rankings. Despite Grok receiving over 500,000 reviews with a 4.9-star rating, it was excluded from Apple’s “Must-Have Apps” list, where ChatGPT appeared as the only AI chatbot on August 24.

“If not for its exclusive deal with OpenAI, Apple would have no reason to refrain from more prominently featuring the X app and the Grok app in its App Store,” the filing argues.

OpenAI dismissed the lawsuit as harassment. “This latest filing is consistent with Mr. Musk’s ongoing pattern of harassment,” spokesperson Kayla Wood said.

Apple previously told Bloomberg that its App Store is “designed to be fair and free of bias.”

The legal battle escalates a personal feud between Musk and OpenAI CEO Sam Altman. Musk co-founded OpenAI in 2015 but left three years later due to disagreements over the company’s direction. He launched xAI in 2023 as a direct competitor.

xAI acquired X (formerly Twitter) in March through an all-stock transaction worth $33 billion. This deal was designed to give xAI access to social media data for training its Grok chatbot.

The lawsuit claims OpenAI controls at least 80 percent of the AI chatbot market. Meanwhile, Apple holds 65 percent of the U.S. smartphone market, according to the filing.

Legal experts say the case could establish important precedents for AI regulation. Courts will need to define what constitutes an AI market and how antitrust laws apply to these new technologies.

“It’s a canary in the coal mine in terms of how courts will treat AI, and treat antitrust and AI,” said Christine Bartholomew, a University at Buffalo law professor.

The 61-page complaint requests a permanent injunction to stop the alleged anti-competitive behavior. It also seeks unspecified damages that could reach billions of dollars.

This represents Musk’s latest legal challenge against OpenAI. He previously sued the company in a California court, claiming it betrayed its original nonprofit mission by pursuing commercial profits.