X Corp. and its subsidiary, X.AI LLC, have filed a federal lawsuit against Apple and OpenAI, alleging that the two companies’ exclusive integration of ChatGPT violates federal competition laws. The lawsuit, submitted on Monday, asserts that such actions reinforce effective monopolies in their respective markets. According to the complaint, Apple holds a substantial 65 percent market share in the U.S. smartphone sector, while OpenAI has an impressive 80 percent share in the generative AI chatbot market.
The lawsuit was filed in the U.S. District Court for the Northern District of Texas and raises several federal antitrust claims. Under Section 1 of the Sherman Act, the plaintiffs argue that Apple and OpenAI are leveraging their size and market dominance to unlawfully restrain trade and suppress competition. The complaint further alleges that the companies have conspired to monopolize their markets in violation of Article 2 of the Sherman Act. They are also accused of violating the law against “engaging in a contract, combination, or conspiracy in restraint of trade.”
In the lawsuit, X.AI claims that Apple has deprioritized its app, Grok, in the App Store rankings and delayed updates for the app while favoring ChatGPT. The case draws on precedents established in the historic 2001 Microsoft antitrust case, where Microsoft was found to engage in monopolistic behavior due to its dominant market share in operating systems.
The plaintiffs are seeking a permanent injunction to prohibit Apple and OpenAI from continuing their alleged anti-competitive practices. Additionally, they are pursuing financial damages that could amount to billions of dollars. Nonetheless, X.AI faces considerable challenges in proving antitrust injury, as it must demonstrate that its damages stemmed from unlawfully reduced competition rather than typical business rivalries.
OpenAI’s ChatGPT launched in November 2022 and quickly secured a significant share of the burgeoning generative AI market. Plans for a partnership between OpenAI and Apple are reportedly underway, with the intention to make ChatGPT the sole AI chatbot integrated into Apple’s iOS operating system. This would provide exclusive access to Siri prompts and other features on iPhones, intensifying the competitive landscape.
X.AI is part of Elon Musk‘s X Corp., which owns the platform previously known as Twitter. The company is recognized for its chatbot, Grok, which competes directly with ChatGPT. This lawsuit occurs against a backdrop of ongoing controversies in the tech sector. Apple has been involved in disputes regarding data access in the United Kingdom, while one of OpenAI’s main competitors, Anthropic, is currently embroiled in a lawsuit concerning the use of copyrighted works.
The outcome of this case could have significant implications for the tech industry, particularly in how market power is regulated and the competitive dynamics between major players. As the legal proceedings unfold, both companies may face increased scrutiny regarding their market practices and strategies.