Musk Sues Apple, OpenAI, Saying They Hurt AI Competition (3)

Elon Musk accused Apple Inc. and OpenAI in a lawsuit of unfairly favoring the artificial intelligence company across iPhones and thwarting competition for other chatbot makers.

Musk’s X and xAI seek billions of dollars in damages in the suit filed Monday in federal court in Fort Worth, Texas, arguing that Apple’s decision to integrate OpenAI into the iPhone’s operating system inhibits rivalry and innovation within the AI industry and harms consumers by depriving them 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 US — have a partnership around AI built into the latest iPhones. Musk, 54, has a long-running feud with OpenAI Chief Executive Officer Sam Altman, which dates back to disagreements that led to their split after the two founded OpenAI together a decade ago.

Apple and OpenAI’s “exclusive arrangement has made ChatGPT the only generative AI chatbot integrated into the iPhone,” lawyers for 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.”

“This latest filing is consistent with Mr Musk’s ongoing pattern of harassment,” an OpenAI spokesperson said in a statement. Apple did not immediately respond to a request for comment.

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 Inc. over the App Store’s dominance of the smartphone software market.

Some of the allegations in Musk’s suit mirror those brought by the Justice Department against Apple. The US sued the iPhone maker in New Jersey federal court in March 2024, alleging the company has monopolized the smartphone market by blocking rivals from accessing hardware and software features on its popular devices. Apple lost a bid to dismiss the case in June.

The government’s lawsuit alleges that Apple has used its power over app distribution to thwart innovations that would have made it easier for consumers to switch phones, in particular by blocking “super apps.” Musk’s suit makes a similar allegation that Apple’s conduct inhibits “everything apps” like X.

“Apple’s conduct inhibits the growth of AI and super apps by allowing OpenAI to maintain its monopoly and curtail innovation and investment in generative AI chatbots that would develop into super apps that replace iPhone functionality,” according to the complaint.

In addition to monetary damages, the suit seeks a court order preventing Apple and OpenAI from continuing with their alleged “illegal arrangement.”

Apple announced a deal with OpenAI last year to incorporate ChatGPT into Apple Intelligence on the iPhone. In court testimony in May, Eddy Cue, Apple’s senior vice president of services, said the deal with OpenAI is non-exclusive and Apple has the ability to integrate other AI apps or features if it wants. Cue’s testimony was part of the Justice Department’s antitrust lawsuit against Google.

Read More: Musk Accuses Apple of Unfairly Favoring OpenAI on iPhone

The lawsuit filed by Musk’s companies follows his Aug. 11 social media post in which he 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.” Altman replied to Musk’s X post by turning the focus to how Musk manages the X network, suggesting he manipulates it to serve his personal interests.

The case is X Corp. et al v. Apple Inc., US District Court, Northern District of Texas (Fort Worth).

(Updates with Apple losing bid to dismiss Justice Department lawsuit in ninth paragraph. An earlier version of the story corrected the date of the DOJ suit.)

--With assistance from Mark Gurman, Shirin Ghaffary and Leah Nylen.

To contact the reporter on this story:
Madlin Mekelburg in Austin at mmekelburg@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net

Dana Wollman, Peter Blumberg

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