Musk’s xAI Sues Apple, OpenAI Over ‘Rigged’ AI Market

Elon Musk’s artificial intelligence startup xAI has taken Apple and OpenAI to court, accusing them of illegally teaming up to block competition in the fast-growing AI sector.

The lawsuit, filed Monday in a US federal court in Texas, claims the two companies “locked up markets to maintain their monopolies and prevent innovators like X and xAI from competing.”

According to Musk’s complaint, Apple conspired with OpenAI to suppress xAI’s products on the App Store — specifically the X app and the Grok chatbot. “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,” xAI argued.

At the center of the case is Apple’s 2024 deal to integrate ChatGPT directly into its devices. The lawsuit says this move effectively forces iPhone users to use ChatGPT instead of alternatives like Grok. “OpenAI’s exclusive arrangement has made ChatGPT the only generative AI chatbot integrated into the iPhone,” the filing said.

Apple currently controls about 65 percent of the smartphone market. Neither Apple nor OpenAI have commented on the suit.

Musk has been threatening legal action for months, blasting Apple on his social media platform X for “making it impossible for any AI company besides OpenAI to reach #1 in the App Store.” OpenAI CEO Sam Altman shot back earlier this month, saying Musk himself manipulates X “to benefit himself and his own companies and harm his competitors.”

xAI, launched less than two years ago, is already a direct rival to OpenAI and China’s DeepSeek. Musk also folded X into xAI earlier this year for $33bn and integrated Grok into Tesla cars.

Musk is also suing OpenAI and Altman separately in California over its transition from a nonprofit to a for-profit.

Apple, meanwhile, is still tied up in a long-running legal battle with Fortnite maker Epic Games over its App Store monopoly practices.

On Wall Street, Apple’s shares were up 0.6 percent despite the lawsuit. Tesla rose 1.2 percent by midday in New York, while OpenAI remains private.