Tesla CEO Elon Musk has taken legal action against Apple and OpenAI, alleging in a Monday lawsuit that the companies have teamed up to entrench monopolies in the rapidly expanding AI chatbot market. Musk, who has complained publicly in recent weeks that Apple has been favoring OpenAI’s ChatGPT over his own Grok chatbot in its App Store recommendations, accused Apple in a federal court filing of entering into an exclusive, anti-competitive deal with OpenAI.

Filed on behalf of Musk’s X and xAI companies, the lawsuit goes far beyond X’s gripes about App Store product rankings. It also alleges that OpenAI and Apple have agreed to give ChatGPT exclusive access to iPhone features and capabilities, including as the default chatbot within Apple’s various “chat with AI” features, and that it is effectively locking out any competitor that would otherwise be able to tap Apple’s large user base. The suit further accuses Apple and OpenAI of violating antitrust and unfair competition laws in ways that could seriously threaten Musk’s own plans for an “everything app” built on Twitter, which he purchased in 2022.

Apple has made ChatGPT the default chatbot across Siri, Apple’s Writing Tools, and multiple other features, and is giving OpenAI exclusive access to billions of user prompts. X says that data is vital to AI training and improvement, and rivals like Grok can’t scale without access to it. The filing says OpenAI has at least an 80 percent market share of the chatbot sector, and could extend its dominance for the foreseeable future with Apple’s help.

“Generative AI chatbots would vigorously compete with one another in a fair market,” the lawsuit states. “Instead, defendants’ anticompetitive conduct has handed a substantial portion of the market to ChatGPT.”

Motivation by Fear

X also alleges Apple is acting out of fear that a successful rival super app could one day make iPhones less essential to users, in the same way that WeChat has supplanted many standalone smartphone apps in China. Apple executive Eddy Cue is even quoted in the complaint as saying he is worried advances in AI could “destroy Apple’s smartphone business.” Musk’s complaint paints the deal as a cynical effort by Apple to protect its iPhone monopoly by helping OpenAI take a decisive lead in generative AI.

Exclusive, and Growing Power

The complaint likens the arrangement to Apple’s long-time deal with Google to be the default search engine on iOS, which U.S. regulators have argued helped entrench Google’s search dominance. The suit alleges Apple has rebuffed xAI’s attempts to work with iOS and even refused to feature Grok in its App Store, going as far as declining to promote Grok with the launch of a new “Imagine” feature for X. The suit also alleges Apple tweaked App Store rankings and delayed updates for Grok in order to suppress it.

At stake, Musk alleges, is the future of AI-powered platforms themselves. The lawsuit notes Siri fielded 1.5 billion daily user requests worldwide in 2024, surpassing the total number of user prompts received by all generative AI chatbots combined that year. If those prompts are funneled to OpenAI, the company alone would control up to 55 percent of all possible chatbot interactions, X argues.

The filing also suggests the deal could hurt consumers as a result. Users may be left with fewer choices and less powerful chatbots, while paying Apple monopoly prices for iPhones. Meanwhile, OpenAI could use its position to raise prices on its own subscription plans. It has announced plans to double its “plus” subscription over the next four years, something the filing claims would be impossible without marketwide pricing power.

The effect of Apple’s arrangement could also chill investment in rivals. If Apple “continues to press its thumb firmly on the scale in favor of ChatGPT,” Musk’s suit argues, there will be little point to investors in funding startups, leaving them without resources they need to scale. X also warns it risks losing talent as Big Tech firms snap up star developers from underfunded competitors.

The financial upside to the Apple-OpenAI deal is another point of contention. OpenAI, according to the filing, gave ChatGPT away for free to Apple and essentially paid the company to work with it, and Apple has projected it will make little or no profit in the near-term. The filing suggests Apple and OpenAI view the strategic exclusivity of their arrangement as more valuable than any direct revenue, since it broadly prevents rivals from gaining access.

“The real motive was Apple and OpenAI’s shared goal of blocking competition,” the complaint argues.

For Musk, the deal could imperil his own competitive AI future. If the deal is allowed to stand, the suit warns, Grok may never be able to fairly compete, diminishing X’s overall value to customers and investors. “Because Grok’s functionality is a key feature of the X app, the X app is more attractive the better Grok performs,” the filing states. “Defendants’ conduct makes Grok less able to compete with ChatGPT, leading to fewer customers, less revenue, and ultimately a depressed enterprise value for X.”

Musk’s companies are seeking billions in damages as well as a permanent injunction preventing Apple from exclusively integrating ChatGPT into its products. In a statement to Ars Technica, OpenAI spokesperson Devon Zuegel dismissed the suit as part of Musk’s “ongoing pattern of harassment.” Apple declined to comment.

A judge’s decision on whether the Apple and OpenAI have illegally entrenched their monopolies could have broad implications for how competitive the next era of AI innovation will be.