Elon Musk’s AI company xAI sued Apple and ChatGPT maker OpenAI in federal court on Monday, alleging they conspired to freeze out competition in both the smartphone and AI chatbot markets. But xAI’s lawyers face an uphill battle in proving that Apple’s defaulting to ChatGPT on iOS harms consumers.
Apple has struggled to add its own advanced AI features—including a chatbot—to its operating systems for the iPhone, iPad, and Mac. At its June 2024 Worldwide Developers Conference (WWDC), Apple instead announced an exclusive agreement with OpenAI, making ChatGPT the default chatbot option on its devices.
Musk and xAI argue that the deal hurts rivals, including xAI’s Grok chatbot. “Working in tandem, Defendants Apple and OpenAI have locked up markets to maintain their monopolies and prevent innovators like X and xAI from competing,” reads the lawsuit, which was filed in the U.S. District Court for the Northern District of Texas. “Plaintiffs bring this suit to stop Defendants from perpetrating their anticompetitive scheme and to recover billions in damages.”
Currently, iPhone users who want Grok must download its stand-alone app. Musk and xAI contend that Apple should be compelled to let users easily select any chatbot. While Apple has spoken about integrating other models such as Google’s Gemini and Anthropic’s Claude, it has not acted on those talks so far.
The suit raises antitrust issues, but recent precedent makes such cases hard to win. Courts typically judge them based on consumer benefit—such as product quality and cost—rather than on harm to competition alone. (By one estimate, ChatGPT accounted for more than 80% of AI chatbot visits as of July.)
“It’s also consistent with what antitrust laws are about,” says Sarah Kreps, director of the Tech Policy Institute at Cornell University. “Just because ChatGPT has 80% of the market doesn’t mean that that’s antitrust. The law doesn’t want to punish companies for products that consumers want.”
OpenAI was first to market with a large language model-driven chatbot in late 2022, with ChatGPT hitting 100 million users in just two months. For many, “ChatGPT” became synonymous with “AI chatbot” well before its Apple deal.
Kreps notes that xAI’s lawyers must show the Apple-OpenAI partnership “meaningfully raised prices for consumers, reduced innovation, or blocked consumer choice,” which is a high bar to cross. The court may also question xAI’s standing, since it is a direct competitor.
The lawsuit also accuses Apple of favoring OpenAI in its App Store. “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,” it claims. Musk previously threatened to sue Apple, saying it was “impossible for any AI company besides OpenAI to reach #1 in the App Store.”
The new filing continues Musk’s long-running feud with OpenAI and CEO Sam Altman. Musk, who co-founded OpenAI in 2015 and left its board in 2018, sued the company last year for pursuing profit despite its nonprofit structure. A recent filing revealed Musk tried to buy OpenAI’s core assets earlier this year, even approaching Meta CEO Mark Zuckerberg about a joint bid.
The venue of xAI’s lawsuit also matters quite a bit here. Companies often file in the Northern District of Texas, where cases are frequently assigned to a single judge, allowing for “judge shopping.” That court falls under the conservative Fifth Circuit Court of Appeals, which can reduce the risk of unfavorable outcomes in antitrust cases. It also has a record of producing rulings that quickly rise to the Supreme Court.
Politics could also influence the outcome. The case’s visibility could lead the Trump administration to intervene, with President Donald Trump potentially siding with Musk (though the two men certainly have their differences) on Truth Social and calling Apple’s deal a monopoly. That, in turn, could prompt the Federal Trade Commission or Justice Department to investigate or file a brief urging Apple to stop favoring ChatGPT.
But Kreps warns that the administration’s stance is unpredictable. At one time, Trump courted tech industry players in part by promising minimal regulation, but then he’s also stoked populist resentment toward “West Coast elites” who run “liberal” tech companies.
Given Trump’s split loyalties and his fraught relationship with Musk, the safer political move might be to stay out of it. But whether Trump follows that advice is another matter.
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