Musk sues Apple and OpenAI over exclusive ChatGPT iPhone deal

Elon Musk’s companies X and xAI have filed a new lawsuit against Apple and OpenAI, accusing them of anticompetitive behavior in the artificial intelligence industry. The lawsuit escalates Musk’s ongoing legal feud with OpenAI and targets the exclusive partnership between Apple and OpenAI that integrates ChatGPT into iPhones, which Musk claims has created unfair market advantages and damaged his ability to compete.

What you should know: The lawsuit seeks billions in damages and a permanent injunction to stop what Musk’s companies describe as an anticompetitive scheme.

• Filed in U.S. District Court in Texas on Monday, the case claims Apple and OpenAI’s partnership has “locked up markets” and maintained monopolies in AI.
• xAI argues that ChatGPT benefits from “billions of user prompts originating from hundreds of millions of iPhones” through its exclusive iPhone integration.
• The lawsuit also accuses Apple of deprioritizing competitor AI chatbot apps in the App Store.

The big picture: This legal action represents the latest escalation in Musk’s long-running battle with OpenAI CEO Sam Altman, stemming from Musk’s departure from OpenAI’s board and subsequent launch of rival AI company xAI.

• Musk was an early investor in OpenAI but left to start xAI, and he has an ongoing separate lawsuit against OpenAI and Altman over fraud and breach of contract claims.
• The market dynamics show ChatGPT holding at least 80% market share in generative AI chatbots, while xAI’s Grok has just “a few percentage points.”

Key details: Musk’s companies claim they’ve been systematically excluded from Apple’s ecosystem despite attempts to integrate.

• xAI has requested to integrate Grok directly with Apple’s iOS software but “hasn’t been allowed to do so,” according to the lawsuit.
• While users can access other AI chatbots through web browsers or apps, “those options do not provide the same level of functionality, usability, integration, or access to user prompts as ChatGPT’s first-party integration with Apple.”
• The exclusive arrangement allegedly makes it difficult for competitors to “scale and innovate” in the generative AI space.

What they’re saying: Both defendants have pushed back against Musk’s allegations.

• “This latest filing is consistent with Mr Musk’s ongoing pattern of harassment,” OpenAI said in a statement.
• Apple previously told Bloomberg that it collaborates with many developers “to increase app visibility in rapidly evolving categories” and that “The App Store is designed to be fair and free of bias.”
• Earlier this month, Musk announced his legal intentions on X, sparking a public sparring match with OpenAI’s Altman on the social media platform.