In a significant legal move, XAI, an AI development company owned by billionaire Elon Musk, filed a lawsuit in the federal court in Texas against Apple and OpenAI, the developer of ChatGPT. The lawsuit accuses both companies of illegal conspiracy to restrict competition in the AI market, reinforcing their monopoly and limiting startups like XAI from competing. According to the lawsuit, Apple and OpenAI seek to consolidate their market dominance through exclusive agreements that prevent other companies from gaining prominence in the app market. XAI claims that Apple, by integrating ChatGPT into its operating systems (iPhone, iPad, and Mac), has blocked opportunities for apps like X and Grok, owned by XAI, from gaining visibility in its App Store, demanding billions in damages for these practices.

This lawsuit follows a previous threat from Elon Musk in August 2025, where he indicated on his platform “X” that Apple’s practices make it impossible for any AI company except OpenAI to reach the top of the App Store. XAI acquired the “X” platform in March 2025 for $33 billion to enhance its capabilities in training the Grok chatbot, which is also integrated into Tesla electric cars. OpenAI responded to the lawsuit by calling it part of an ongoing pattern of harassment by Musk, while Apple has not immediately commented. Musk also faces a separate lawsuit against OpenAI and its CEO Sam Altman in a federal court in California related to OpenAI’s transition from a nonprofit to a commercial company, noting Musk was a co-founder of OpenAI in 2015.

Antitrust law experts believe Apple’s dominance in the smartphone market may support XAI’s claims that the company illegally ties device sales to the ChatGPT app. However, Apple could defend its position by arguing that the partnership with OpenAI is a business decision in a competitive environment and that it is not obligated to support competitors. Apple might also justify integrating AI into its systems for security or operational performance reasons, according to Herbert Hofenkamp, a law professor at the University of Pennsylvania. This lawsuit presents an unprecedented opportunity for U.S. courts to define whether there is a specific AI market and its boundaries, a key issue in antitrust cases. Christine Bartholomew, a law professor at the University of Buffalo, describes this case as a warning signal on how courts will handle AI and antitrust issues in the future.

The lawsuit comes amid Apple’s controversial App Store practices, having faced previous lawsuits such as the one filed by Epic Games, which resulted in a court order requiring Apple to provide more competitive in-app payment options. ChatGPT from OpenAI has seen exceptional growth since its late 2022 launch, becoming the fastest-growing consumer app in history. This case may impact AI market dynamics, especially amid increasing competition between Musk-backed XAI, Microsoft-backed OpenAI, and startups like China’s DeepSeek.