xAI sues OpenAI for allegedly stealing the company’s trade secrets.

Elon Musk’s xAI filed a lawsuit on Wednesday against OpenAI in California federal court for allegedly stealing its trade secrets. The artificial startup accused OpenAI of trying to gain an unfair advantage in the race to develop AI technology.

According to the lawsuit, xAI said OpenAI tended to hire away its employees to gain access to trade secrets related to its AI chatbot Grok. xAI alleged that Sam Altman’s firm targeted employees with access to xAI’s source code and its operational advantages in launching data centers.

Court bars former xAI employee from sharing trade secrets with OpenAI

Elon Musk confirmed a former xAI engineer joined OpenAI, uploaded xAI’s entire codebase, and is now sued for stealing Grok trade secrets after selling $7M in stock pic.twitter.com/3X4VlIBMcJ

— Dima Zeniuk (@DimaZeniuk) August 30, 2025

The lawsuit also revealed that OpenAI induced those employees to breach their confidentiality and other obligations to xAI through unlawful means. xAI found out about the alleged campaign by OpenAI while investigating allegations of trade secret theft against former engineer Xuechen Li. 

xAI had accused the former employee of taking confidential information to OpenAI in a separate lawsuit. Musk’s AI company got a court order earlier this month that temporarily blocked Li from working or even communicating about AI tech with his new employer.

On September 4, U.S. District Judge Rita Lin in San Francisco issued a temporary restraining order prohibiting Li from indulging in OpenAI’s generative AI. According to the lawsuit, xAI revealed that Li began working at Musk’s company last year and was involved in training and developing its chatbot Grok. The lawsuit further disclosed that the former employee took Grok’s trade secrets in July after accepting a job at OpenAI and sold $7 million in xAI stock.

The new lawsuit alleged that the trade secrets could allow OpenAI to improve ChatGPT with xAI’s more innovative artificial intelligence technology and imaginative features. According to court documents, Li admitted to stealing company files and covering his tracks. 

The former employee came clean during a meeting on August 14, as the firm later found additional stolen materials on his devices that he had not disclosed. xAI sought an unspecified amount of monetary damages and a restraining order blocking Li’s move to OpenAI.

Judge Lin barred the former xAI employee from communicating about generative AI with any officer, director, employee, agent, supplier, consultant, or customer of OpenAI. The federal judge said the order will last until Musk’s company has confirmed that all of its confidential information in Li’s possession, custody, or control has been deleted. Lin set a hearing for October 7 to evaluate whether a longer order should be imposed.

xAI sues Apple and OpenAI for monopolizing the tech market

Cryptopolitan reported that xAI sued Tim Cook’s Apple in August for allegedly colluding with OpenAI illegally to monopolize the market for AI chatbots on Apple devices and suppress rival tech platforms. The lawsuit alleged that Apple had deprioritized so-called super apps and generative AI competitors in its App Store rankings, while including OpenAI’s chatbot in Apple products.

OpenAI’s spokesperson argued that the filing was consistent with Musk’s ongoing pattern of harassment. Musk had also threatened to sue Apple earlier that same month for an antitrust violation. Musk said Apple behaved in a manner that makes it impossible for any AI firm besides OpenAI to rank number one in the App Store.

“This is a remarkable claim given what I have heard alleged that Elon does to manipulate X to benefit himself and his own companies and harm his competitors and people he doesn’t like.”

–Sam Altman, CEO of OpenAI.

Apple’s spokesperson maintained that the App Store was designed to be fair and free of bias. Altman was also separately sued by Musk for allegedly deviating from the company’s original mission to benefit humanity. 

OpenAI also countersued Musk in April for harassment. The company alleged that Musk and xAI engaged in attacks on social media and in the press, and through a bid to buy the company for $97.4 billion, to harm OpenAI’s business relationship.

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