Elon Musk sues Apple, OpenAI, saying they hurt AI competition

AUSTIN – Mr Elon Musk accused Apple and ChatGPT owner OpenAI in a lawsuit of unfairly favouring the artificial intelligence company across iPhones and thwarting competition for other chatbot makers. 

Mr Musk’s X and xAI filed the lawsuit on Aug 25 in federal court in Fort Worth, Texas, arguing that Apple’s decision to integrate OpenAI into the iPhone’s operating system harms competition and deprives consumers of choice. 

The billionaire founder of xAI Holdings, which now houses the Grok AI team and X social network, said Apple makes it impossible for anyone other than OpenAI’s ChatGPT to reach the top of the App Store charts, a sought-after global spotlight for app developers.

The case sets up a high-stakes court showdown between the richest person on the planet and one of the world’s most valuable companies.

Apple and OpenAI – whose ChatGPT service is the most-downloaded free iPhone app in the United States – have a partnership around artificial intelligence (AI) built into the latest iPhones. Mr Musk, 54, has a long-running feud with OpenAI chief executive Sam Altman which dates back to disagreements that led to their split after the two founded OpenAI together.

Apple and OpenAI’s “exclusive arrangement has made ChatGPT the only generative AI chatbot integrated into the iPhone”, lawyers for Mr Musk’s companies said in the lawsuit, and “have locked up markets to maintain their monopolies and prevent innovators like X and xAI from competing”.

Apple has tangled with regulators around the world in recent years over claims that its app store has illegally squelched competition in the marketplace for mobile applications used on smartphones. The iPhone maker also has been engaged in a five-year legal fight with Fortnite maker Epic Games over the App Store’s dominance of the smartphone software market.

The suit follows an Aug 11 post on X by Mr Musk, who asked if Apple is “playing politics” by not highlighting his products. Apple responded in a statement that the App Store “is designed to be fair and free of bias”.

Mr Altman responded to Mr Musk’s X post by turning the focus to how Mr Musk manages the X network, suggesting he manipulates it to serve his personal interests. 

OpenAI’s ChatGPT became the fastest-growing consumer application in history in the months following its launch in late 2022. Mr Musk’s xAI was launched less than two years ago and competes with Microsoft-backed OpenAI as well as with Chinese start-up DeepSeek.

Antitrust legal experts who are not involved in the lawsuit said Apple’s dominant position in the smartphone market could bolster xAI’s claims that the company is illegally tying its iPhone sales with OpenAI’s ChatGPT.

But they said Apple could counter that partnering with OpenAI was a business decision in a competitive environment, and that it has no obligation to help its rivals gain market share.

Apple may also argue there are security or operational reasons to integrate AI into its operating system, said Mr Herbert Hovenkamp, who teaches at the University of Pennsylvania’s law school.

More broadly, the lawsuit could give courts in the US their first opportunity to assess whether there is a defined market for AI and what it encompasses, a threshold issue in antitrust litigation.

“It’s a canary in the coal mine in terms of how courts will treat AI, and treat antitrust and AI,” said Ms Christine Bartholomew, a professor at the University at Buffalo School of Law. BLOOMBERG, REUTERS