Eliza Labs files an antitrust lawsuit against Elon Musk’s X Corp

Eliza Labs, an AI software company founded by Shaw Walters, has filed a lawsuit against the Elon Musk-owned X Corp. in the U.S. District Court for the Northern District of California.  

Eliza Labs claims X Corp., leveraging its “incredible monopoly power,” was able to suspend its account after extracting valuable knowledge from the AI firm.

Walters goes after Musk in new lawsuit

In the Wednesday filing at a federal court in San Francisco, Eliza Labs and its founder, Shaw Walters, accused X of launching copycat AI products after being exposed to key technical information from Eliza. The lawsuit also claims that X removed the company from its platform.

“This case involves X Corp wielding its incredible monopoly power with perceived immunity from suit to deplatform users with the intent to restrain competition for launching AI Agents on the X Corp platform,” the lawsuit documents read.

In their argument, the plaintiffs said that X suspended Eliza Labs’ account and got rid of Walters without warning or legitimate justification.

This came after X reached out to Eliza last year to discuss AI agents operating on X’s platform. Eliza. During those meetings, Shaw Walters said they shared extensive details about the company’s development roadmap and vision for AI agents.

Eliza claims that X said it would need up to $50,000 per month for an enterprise license to continue operating on the platform. The lawsuit suggested X was forcing developers to pay “exorbitant” prices if they wanted to remain on the site, but Eliza claims it had declined to pay for such services.

The AI firm has tagged X’s move as a “coordinated, fraudulent, and anticompetitive effort” to obtain money and technical intelligence from the plaintiffs regarding their open-source software development processes.

Eliza said getting ousted from the platform in June caused significant harm to its relationship with customers and affected the company’s growth.

xAI sued Apple and OpenAI over AI competition and app store rankings

Ironically, Eliza is accusing Musk of using the X platform for the same practice that the billionaire has complained about in recent days.

Some days ago, the entrepreneur’s artificial intelligence startup xAI sued Apple and ChatGPT maker OpenAI in a U.S. federal court in Texas, accusing the duo of illegally conspiring to thwart competition for artificial intelligence.

“Apple and OpenAI have locked up markets to maintain their monopolies and prevent innovators like X and xAI from competing,” the lawsuit claimed.

According to Musk, the Apple App Store now seems to be a giant ad center for OpenAI products. Meanwhile, the X app and the Grok app are relegated to the back burner despite their popularity.

OpenAI has dismissed the lawsuit as part of “Musk’s ongoing pattern of harassment.” However, Musk believes there is little justification for why the Grok app, with its million reviews and 4.9 average rating, is not getting mentioned by Apple on any lists.

Musk had threatened to sue California-based Apple earlier this month, citing how Apple’s behavior “makes it impossible for any AI company besides OpenAI to reach #1 in the App Store.”

Antitrust legal analysts who are not involved in the lawsuit think Musk has a strong case, especially given Apple’s dominant position in the smartphone market.

However, they also said Apple could counter by declaring its partnership with OpenAI as a business decision in a competitive environment, and that it has no obligation to help its rivals gain market share.

The case is still developing, but commentators believe it will set a precedent and give U.S. courts their first chance to assess whether there is a defined market for AI and what it encompasses, a threshold issue in antitrust litigation.

If you're reading this, you’re already ahead. Stay there with our newsletter.