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Why xAI Is Suing Apple and OpenAI
At Squaredtech, we cover the biggest stories shaping technology, and the latest move from Elon Musk has captured global attention. Musk’s artificial intelligence startup, xAI, has filed a lawsuit in federal court in Texas against Apple and OpenAI, the company best known for creating ChatGPT.
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The lawsuit alleges that Apple and OpenAI are conspiring to restrict competition in the AI market. According to the filing, both companies are accused of locking up markets to maintain their monopolies and deliberately preventing startups like xAI from competing fairly. Musk’s legal team claims these practices have limited exposure for xAI’s products, including the Grok chatbot and the X app, by suppressing them in Apple’s App Store rankings.
This is not just a dispute about app placement. We sees this as an antitrust battle that could define how courts treat AI competition in the United States. If successful, xAI’s lawsuit could establish legal precedent around whether AI services represent a distinct market and whether tech giants have been illegally using partnerships to block rivals.
Breaking Down the Allegations Against Apple and OpenAI
The lawsuit claims Apple entered into an exclusive deal with OpenAI, ensuring that OpenAI’s ChatGPT is prominently featured in Apple’s App Store and integrated into its products. Musk argues that this arrangement left no room for competing AI services, even if those services demonstrate strong performance or high user satisfaction.
One of the lawsuit’s central complaints is that despite millions of reviews and a 4.9-star average rating for the Grok chatbot, Apple has allegedly refused to showcase Grok in its App Store recommendations. Musk publicly echoed this point on his platform X, writing, “A million reviews with 4.9 average for @Grok and still Apple refuses to mention Grok on any lists.”
According to xAI, Apple’s refusal is not based on product quality but on its close relationship with OpenAI. By limiting visibility of xAI’s tools, Apple allegedly ensures that OpenAI’s ChatGPT retains dominance as the most widely recognized consumer-facing AI product.
xAI’s lawsuit seeks billions of dollars in damages, arguing that Apple and OpenAI’s actions have caused measurable harm to its ability to compete in the fast-growing AI sector.
Our editorial team views this claim as a direct challenge to the foundation of Apple’s App Store practices and OpenAI’s market advantage. It also ties into Musk’s broader strategy of using both litigation and public pressure to confront companies he perceives as abusing their power.
The Larger Context: Apple, OpenAI, and the AI Market
To understand the weight of this case, we examined the broader context of Apple’s and OpenAI’s positions in the AI ecosystem.
- Apple’s App Store Control: Apple has faced multiple lawsuits in recent years over its control of the App Store. Companies such as Epic Games have argued that Apple’s restrictive policies limit competition. In one ruling, a judge ordered Apple to allow more flexibility in app payment systems, showing courts are willing to question Apple’s practices.
- OpenAI’s Rapid Growth: OpenAI’s ChatGPT became the fastest-growing consumer application in history after its late 2022 launch. With backing from Microsoft, OpenAI has embedded its tools into products ranging from Office to Azure cloud services. This rapid integration has cemented its position as the leading generative AI provider.
- xAI’s Position: Founded less than two years ago, xAI competes against both OpenAI and newer players like DeepSeek in China. Musk has integrated the Grok chatbot into Tesla vehicles and other platforms, but exposure through mobile apps remains critical. According to the lawsuit, Apple’s preference for OpenAI effectively prevents xAI from reaching top rankings, stifling growth despite strong consumer reviews.
Legal experts suggest Apple’s dominant role in smartphones could strengthen xAI’s case. Because Apple controls both hardware and app distribution, its decisions carry weight across the entire mobile AI ecosystem. If courts view Apple as tying iPhone sales to a preferred AI service, they may treat it as a monopoly issue.
At Squaredtech, we see this as a pivotal test case for how regulators and courts define the boundaries of AI competition.
Legal and Strategic Implications of the Case
From a legal standpoint, the lawsuit forces U.S. courts to consider whether artificial intelligence products constitute a defined market of their own. Antitrust law requires a clear understanding of the market before ruling on monopoly claims. Until now, AI has often been seen as a feature embedded in other services, not a standalone sector.
Christine Bartholomew, a professor at the University at Buffalo School of Law, described the lawsuit as “a canary in the coal mine in terms of how courts will treat AI, and treat antitrust and AI.” If courts recognize AI as a distinct market, companies like Apple and OpenAI could face stricter scrutiny in how they structure partnerships and distribution.
Apple is likely to argue that its deal with OpenAI was a business decision, not an illegal conspiracy. The company could also claim that integrating ChatGPT into its systems was necessary for security and operational reasons, a defense noted by antitrust experts such as Herbert Hovenkamp of the University of Pennsylvania.
OpenAI has already dismissed the lawsuit as part of Musk’s “ongoing pattern of harassment,” pointing to previous disputes Musk has launched against the company. Musk is separately suing OpenAI and CEO Sam Altman in California over the company’s shift from a nonprofit to a for-profit business.
For Musk, the strategy is clear. By framing Apple and OpenAI as monopolists, xAI positions itself as a challenger fighting for fair competition. From our perspective, this is as much a public relations move as a legal strategy. Musk understands that headlines about monopolies, billions in damages, and blocked competition resonate with regulators, developers, and the public.
Why This Matters for the Future of AI
The lawsuit extends far beyond the interests of Musk or his company. We believe the outcome could influence how AI tools are distributed, marketed, and regulated for years to come.
If courts side with xAI, the decision could:
- Force Apple to open its App Store to greater competition, making it harder for exclusive deals to shape rankings.
- Limit the ability of companies like OpenAI to dominate distribution channels through partnerships.
- Encourage regulators to view AI as a separate market sector, subject to its own competition rules.
On the other hand, if Apple and OpenAI prevail, the ruling may reinforce the current system, where large technology companies can form strategic partnerships without being forced to elevate competitors. This would mean startups like xAI must find alternative ways to gain visibility, possibly outside of traditional app ecosystems.
For consumers, the stakes are high. If competition increases, users may gain access to a wider range of AI tools, including new chatbots and applications beyond ChatGPT. If competition remains limited, a small number of companies could control how most people experience artificial intelligence.
Squaredtech’s Final Take
Elon Musk’s decision to have xAI sue Apple and OpenAI is one of the boldest moves yet in the fight over artificial intelligence dominance. It brings together three of the most powerful forces in technology: Apple’s control over mobile distribution, OpenAI’s generative AI leadership, and Musk’s relentless drive to challenge incumbents.
This case is not just about app rankings. It is about whether artificial intelligence will be controlled by a handful of companies or shaped by open competition. For Squaredtech and our readers, the outcome of this lawsuit could signal a turning point in the way AI markets are defined, regulated, and contested.
As the case unfolds, Squaredtech will continue to track the developments closely. The final ruling may not only decide the future of xAI but also reshape the competitive landscape of AI across the globe.
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