Elon Musk’s artificial intelligence startup xAI and social media platform X filed a federal lawsuit on Monday, August 25, against Apple and OpenAI, alleging the companies engaged in anticompetitive behavior that violates federal antitrust laws. The lawsuit, filed in U.S. District Court for the Northern District of Texas, accuses the tech giants of forming an exclusive partnership that stifles competition in the artificial intelligence market.
The 61-page complaint centers on Apple’s decision to integrate OpenAI’s ChatGPT chatbot into its operating systems for iPhones, iPads and Mac computers. According to the lawsuit, this exclusive arrangement announced in June 2024 during Apple’s Worldwide Developers Conference gives OpenAI unfair access to millions of Apple customers’ prompts and activity data while blocking competitors from similar opportunities.
Musk’s companies allege that Apple controls approximately 65 percent of the U.S. smartphone market while OpenAI holds roughly 80 percent of the generative AI chatbot market. The lawsuit contends that the partnership between these two dominant companies constitutes monopolistic behavior that prevents other AI firms from competing effectively.
The legal action follows threats Musk made on August 12 when he accused Apple of manipulating its App Store rankings to favor OpenAI over competitors. Musk claimed on his X platform that Apple refused to feature his Grok chatbot or X app in the App Store’s “Must Have” section despite strong user ratings and downloads. He alleged that Apple was making “it impossible for any AI company besides OpenAI to reach #1 in the App Store.”
OpenAI CEO Sam Altman responded to Musk’s initial accusations by questioning Musk’s own practices on X, suggesting the billionaire manipulates his platform’s algorithm to benefit his companies and harm competitors. The exchange escalated when Altman challenged Musk to sign an affidavit stating he never directed changes to X’s algorithm to hurt competitors or help his own businesses.
In their formal complaint, xAI and X Corp. argue that Apple’s exclusive deal with OpenAI lacks valid business justification and serves primarily to maintain both companies’ market dominance. The lawsuit claims the arrangement has foreclosed competition among generative AI chatbots, reduced innovation and quality, and helped both companies maintain their respective monopolies.
The companies seek billions of dollars in damages, though no specific figure is cited in the complaint. They also request a court order prohibiting the alleged illegal tactics and practices outlined in their lawsuit.
Apple defended its App Store practices in response to Musk’s initial threats, stating that the platform was designed to be fair and free of bias. The company noted that it features thousands of apps using various signals and criteria for rankings. Apple representatives did not immediately respond to requests for comment about the formal lawsuit.
OpenAI dismissed the legal action in a statement, characterizing it as consistent with Musk’s ongoing pattern of harassment. The company has previously accused Musk and xAI of harassment through litigation, social media attacks and what it termed a “sham bid” to purchase OpenAI for $97.4 billion.
The lawsuit represents the latest escalation in a bitter dispute between Musk and Altman, who co-founded OpenAI together in 2015. Musk left the organization in 2018 following disagreements over its direction and has since launched multiple legal challenges against his former company. He has accused OpenAI of betraying its founding mission as a nonprofit research organization by transitioning to a for-profit enterprise.
Musk established xAI in March 2023 as a competitor to OpenAI and other leading AI companies. The startup acquired X in an all-stock transaction valued at $33 billion earlier this year, combining the social media platform with Musk’s AI ambitions.
Legal experts view the case as potentially significant for how courts will evaluate antitrust issues in the rapidly evolving AI sector. Christine Bartholomew of the University at Buffalo School of Law described the lawsuit as “a canary in the coal mine in terms of how courts will treat AI, and treat antitrust and AI.”
The complaint acknowledges that some rival AI applications have occasionally reached top rankings in Apple’s App Store since the OpenAI partnership began. Chinese AI app DeepSeek reached the number one spot in January, while Perplexity topped charts in India’s App Store in July. However, Musk’s companies argue these isolated instances do not negate the overall pattern of favoritism toward OpenAI.
The lawsuit comes as Apple faces increased regulatory scrutiny over its App Store practices. The European Union fined Apple 500 million euros earlier this year for preventing developers from steering users outside the App Store. The U.S. Department of Justice also filed an antitrust lawsuit against Apple in 2024, accusing the company of maintaining an illegal smartphone monopoly.