Apple and OpenAI Accused of Plotting Monopoly as Elon Musk’s xAI Sues Over Exclusive ChatGPT Integration on iPhones

Elon Musk’s Firms Challenge Apple and OpenAI Over Alleged AI Monopoly

Elon Musk’s AI startup xAI and social media company X have launched a major legal battle against Apple and OpenAI, accusing the tech giants of collaborating to block competition in both the smartphone and artificial intelligence markets.

The lawsuit, filed in federal court in Fort Worth, Texas, claims Apple’s integration of OpenAI’s ChatGPT into iPhones created an unfair advantage for the chatbot while sidelining rivals like xAI’s Grok.

Are Apple and OpenAI Blocking Competition on Purpose?

The complaint argues that Apple’s exclusive arrangement with OpenAI gives ChatGPT access to billions of user prompts from hundreds of millions of iPhone users, while delaying approval of updates from competing apps.

Musk’s lawyers claim this deal “has foreclosed competition among generative AI chatbots, deprived competing generative AI chatbots of scale, and reduced quality and innovation.”

According to the filing, Apple holds around 65% of the US smartphone market, and OpenAI controls roughly 80% of the generative AI chatbot market.

Musk Accuses Apple of App Store Manipulation

The lawsuit also claims Apple manipulates its App Store rankings to favour OpenAI’s ChatGPT over other AI applications.

Musk had warned earlier this month that Apple’s policies “make it impossible for any AI company besides OpenAI to reach #1 in the App Store.”

xAI’s Grok, the lawsuit argues, has been deliberately deprioritized despite competing directly in the AI chatbot space.

Rivalry Between Musk and Altman Deepens

The legal action highlights the ongoing tension between Musk and OpenAI CEO Sam Altman, who co-founded the company with Musk in 2015 before Musk left in 2018.

Musk has criticised OpenAI for straying from its original mission of benefiting the public, while Altman has accused Musk of using X to “benefit himself and his own companies and harm his competitors and people he doesn’t like.”

OpenAI described the lawsuit as “consistent with Mr. Musk’s ongoing pattern of harassment.”

Potential Legal Implications for AI Markets

Antitrust experts note that the case could be among the first in the US to define the competitive boundaries of the AI market.

Legal analysts suggest Apple may argue its partnership with OpenAI was a business decision, citing operational and security reasons for integrating ChatGPT into iPhone systems.

Others point out Apple’s history of app store legal battles, including a long-running dispute with Epic Games over app marketplace dominance, may influence the case.

High Stakes and Billion-Dollar Claims

Musk’s companies are seeking billions in damages and a permanent injunction to halt the alleged anticompetitive practices.

The lawsuit demands a jury trial and frames the case as a confrontation between one of the world’s most influential tech figures and two of the most dominant players in AI and smartphones.

Could This Redefine AI Competition in the US

The Apple-OpenAI deal, announced in June 2024, made ChatGPT the only generative AI integrated with Apple devices, accessible through Siri and other iPhone features.

xAI, launched in 2023, competes not only with OpenAI but also with other global AI players, including Microsoft-backed ChatGPT alternatives and Chinese start-ups like DeepSeek.

Experts suggest the court’s decision could set precedent for how US antitrust laws are applied to AI collaborations and exclusivity agreements in the tech industry.