In a recent legal development, X Corp. and xAI – entities owned by Elon Musk – have commenced a lawsuit against tech giants Apple and OpenAI. The suit alleges manipulation of competitive dynamics within the AI industry, caused by the integration of ChatGPT into iPhones.
The legal filings submitted on Monday suggest that the alliance between OpenAI and Apple has created an anti-competitive environment. The suit points to the Apple Store’s approach of downgrading other AI-based applications and super apps, including those developed by Musk’s companies like Grok and X.
The crux of the argument is that iPhone users are steered away from downloading and using third-party AI applications. This is due to Apple’s policy of setting ChatGPT as the default or preferred chatbot app, once users enable the Apple Intelligence feature on their devices.
In the litigants’ viewpoint, this cooperation between Apple and OpenAI has unfairly favoritized certain products, thereby inhibiting competition in the market. The lawsuit argues ‘Apple and OpenAI have effectively cornered the market, damaging competitive opportunity for innovative entities like X Corp. and xAI.’
Previously this month, Musk had voiced concerns about possible legal action against Apple. His claim centered on Apple’s alleged manipulation of App Store rankings, which distinctly favored OpenAI, calling this an ‘undoubtable infringement of antitrust laws.’
According to Musk, Apple’s conduct has resulted in a market environment where the possibility of any AI entity outperforming OpenAI to claim the top spot in the App Store seems highly improbable. He suggests this monopolizing behavior by Apple is a direct breach of antitrust regulations.
The lawsuit further states that despite the apps developed by X Corp. and Grok receiving positive ratings, they do not make it to the ‘Must-Have Apps’ section in the App Store. On the 24th of August, 2025, the only AI chatbot to feature in this section was reportedly ChatGPT.
This dubious representation in the App Store has led to the assumption that Apple’s collaboration with OpenAI has formed a protective barrier around OpenAI. The defendants are accused of an unchecked monopoly in smartphone technology that has allowed this.
Moreover, it’s also claimed that OpenAI receives undue benefit via its integration with the iPhone’s ChatGPT. Access to countless user prompts from the millions of iPhones worldwide is regarded as a significant unfair advantage given to OpenAI.
By virtue of this integration, OpenAI allegedly enjoys a massive data collection advantage, with the potential to tap into several billion user prompts thanks to the vast user base of iPhones around the globe.
This could potentially provide the AI giant with analytical insights and learning opportunities unparalleled by any competitor, solely due to ‘Apple’s predominant control in the smartphone industry,’ as stated in the lawsuit.
Thus, Musk’s entities argue that this scenario, facilitated by Apple’s partnership with OpenAI, has effectively created a situation that prevents other innovating companies from being able to compete on an equal footing.
By doing so, it paints a picture of an AI industry that’s heavily tilted in favor of entities associated with powerful tech giants, while leaving little room for other innovative entities to make their mark.
This lawsuit marks a pivotal moment in the ongoing narrative about monopolistic behavior in the tech industry. The outcome could hold legal and strategic implications for how partnerships among tech giants are viewed in the context of fair competition.
These concerns underline the importance of striking a balance between technological evolution and maintaining an environment conducive to competition. Observers are closely watching how this dispute unfolds and the potential it holds to shape the AI industry’s future.
In a changing world increasingly reliant on artificial intelligence, these issues expose the potential outcomes of dominant entities partnering up, and the consequences this may have on innovation and the competitive landscape in the tech industry.
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