Elon Musk’s companies, X and xAI, have initiated legal action in federal court in Texas against tech giants Apple and OpenAI. The case is based on an exclusionary 2024 deal Apple made with OpenAI exclusively. According to Musk’s firms, this exclusivity lacks any legitimate business purpose. They claim it has inhibited innovation and competition in the rapidly evolving artificial intelligence space.
The lawsuit alleges that Apple gives preferential treatment to OpenAI for its app store rankings. This practice makes it impossible for other AI developers to effectively compete against them. OpenAI, though co-founded by Musk and Sam Altman in 2015, today monopolizes the generative AI chatbot market in the United States, commanding close to 80% of it. Moreover, Apple’s smartphone market share sits at roughly 65%, providing it extraordinary power over app accessibility for millions of potential users.
Musk’s companies allege that Apple has signed a non-competition deal with OpenAI. Under this deal, OpenAI will have access to all private customer prompts and activity data from millions of Apple users. In response, they claim that by granting OpenAI such access, they provided it with an unfair competitive edge. Consequently, it’s ever more difficult for competitors, such as Musk’s xAI and Grok, to make headway in the market.
Even Elon Musk, one of OpenAI’s cofounders, has voiced alarm about OpenAI’s commercialization turn under Altman. He is calling on the company to recommit to its mission of ensuring that the public good is served. In recent years, Musk has started several other AI companies. Through his work, he hopes to find other ways in an industry that he feels is increasingly being controlled by the major three.
OpenAI has responded to the lawsuit, characterizing it as “consistent with Mr. Musk’s ongoing pattern of harassment.”
“consistent with Mr Musk’s ongoing pattern of harassment” – OpenAI
Whether or not the legal proceedings continue, this lawsuit has the potential to upend the tech industry. It has the potential to greatly alter how companies work together and against one another in the artificial intelligence space. Such a result would dramatically alter the competitive landscape for heavyweights such as Apple and OpenAI. It could create more opportunities for new and young firms to enter the space.