Examining Elon Musk's xAI Lawsuit against OpenAI, Apple
While the lawsuit alleges anticompetitive practices and market monopolization, the case highlights the complexities of proving such claims.
XAI's lawsuit against OpenAI and Apple for allegedly locking up and monopolizing markets could be complex if it reaches trial.
On Monday, August 25, Elon Musk's AI company sued ChatGPT's creator and the iPhone maker for engaging in an "anticompetitive scheme." The lawsuit claims that an agreement made in June 2024 between OpenAI and Apple, under which ChatGPT will be integrated into iPhones, iPads, and Macs, gives ChatGPT an unfair advantage and prevents xAI from advancing.
It also claims that Apple is promoting ChatGPT in its App Store and not prioritizing competitors like Grok.
The lawsuit is the latest public war between Musk and OpenAI's Sam Altman. While Musk is one of the original founders of OpenAI, he and Altman have made their dislike of each other public. This is also the second lawsuit that Musk is engaging OpenAI in. In 2024, Musk sued both Altman and OpenAI for breaching the founding agreement of OpenAI.
Antitrust and monopolization against OpenAI
Like the breach of contract case, Musk and xAI could have a hard time proving claims of antitrust and monopolization.
One reason is that monopoly cases are complex to prove, said Sarah Kreps, a professor in the government department at Cornell University.
For example, in the U.S case against Microsoft in 1998, while the courts initially ruled that Microsoft was illegally monopolizing the web browser market for Windows, that decision was later partially overturned in 2001.
Kreps said the challenge in the case was that even though Microsoft was a dominant player, proving antitrust was difficult.
"It is not just showing monopoly, but it's showing that there's a monopoly that is harmful to consumers," she said. "I'm not even convinced that there's a monopoly in the case of OpenAI, but they are certainly a dominant player."
She added that xAI and Musk will also have to prove consumer interest, and that part will be difficult.
Moreover, a monopoly requires high barriers of entry and superior competitive pricing ability, said Robin Crauthers, a partner at McCarter & English law firm who focuses on antitrust.
"OpenAI is a first mover to the market in the U.S. and that gives them an advantage, but not necessarily monopoly power," Crauthers said. She added that some of the claims xAI made about OpenAI having the most data is most likely a result of OpenAI's first-mover advantage.
On the other hand, xAI also argues that Apple's integration of ChatGPT into its OS could give OpenAI an unfair advantage.
"There's a sense that that integration could lead to OpenAI, getting access to just a ton of data that, again, if the filing were to be believed, a ton of data that others would be barred from accessing, namely all of the prompts that the probably hundreds of millions of users of iPhones around the world would be delivering up right through their machines," said Michael Bennet, associate vice chancellor for data science and AI strategy at University of Illinois Chicago. "It's the longstanding concern on the part of Musk's businesses that the App Store is biased against him."
The claims against Apple
While the court could dismiss the claims against OpenAI, it might keep xAI's claims against Apple because they are similar to the DOJ's lawsuit against the iPhone maker.
The DOJ and 16 other state and district attorneys general filed a lawsuit against Apple in 2024, accusing Apple of being a monopoly and exercising its power to get more money from consumers, developers, content creators, artists, publishers, small businesses and merchants.
"This OpenAI complaint is just sort of saying, 'okay, this is a specific example of an app in which there is an attempt to monopolize,'" Crauthers said.
She said this case is then a subset of the DOJ's case, and since that case has survived a motion to dismiss, this could as well.
"The issue will become, is there enough evidence to back up these claims? And that's where I think there will be some uphill battles," she continued.
While OpenAI could prove to the court that it has agreements with other companies like Microsoft, the court could argue that Apple entered the agreement exclusively to monopolize the platform and its phone services because it might fear that consumers will not use the phones without these apps, Crauthers said.
Multiple lawsuits
The lawsuit is also occurring at the same time that multiple courts across the country are examining large tech companies and their market behavior to check for anticompetitive activities.
"Legally, jurisprudentially, it's on brand," Bennet said.
While the case is legal, there is also a political aspect, mainly because Musk was recently closely involved with the day-to-day operations of the White House and President Donald Trump.
"We will see what type of appetite the domestic regulatory machinery and judiciary have for taking this on, given how much influence the President has over justice, over DOJ, and over federal courts," Bennett said.
Esther Shittu is an Informa TechTarget news writer and podcast host covering artificial intelligence software and systems.
