X Corp. and its subsidiary, X.AI LLC, initiated a federal lawsuit on March 11, 2024, targeting both Apple and OpenAI for alleged violations of federal competition law. The plaintiffs assert that the exclusive integration of OpenAI’s ChatGPT into Apple products reinforces monopolistic practices, thereby stifling competition within their respective markets.
The lawsuit, filed in the US District Court for the Northern District of Texas, claims that Apple commands a significant 65 percent share of the US smartphone market, while OpenAI holds an impressive 80 percent share in the generative AI chatbot sector. These market shares form the basis of multiple federal antitrust claims outlined in the complaint.
Under Section 1 of the Sherman Act, the lawsuit contends that both companies have leveraged their substantial market power to unlawfully restrain trade. Furthermore, the complaint alleges a conspiracy to monopolize their markets, thus violating Article 2 of the Sherman Act. The plaintiffs accuse the defendants of engaging in “a contract, combination, or conspiracy in restraint of trade.”
X.AI claims that Apple has deprioritized its app, Grok, within the App Store rankings and delayed updates for the application, while favoring ChatGPT. This legal action draws parallels to a landmark case from 2001, in which Microsoft was found guilty of monopolistic behavior due to its dominant position in the PC operating system market.
As part of the lawsuit, the plaintiffs are requesting a permanent injunction to prevent Apple and OpenAI from continuing their alleged anticompetitive practices. Additionally, they are seeking damages that could amount to billions of dollars. However, X.AI faces considerable challenges in proving harm under antitrust law, as it must demonstrate that the alleged actions led to reduced competition rather than mere competitive rivalry.
OpenAI’s ChatGPT gained rapid popularity after its launch in November 2022, quickly securing a dominant position in the generative AI market. Plans for a partnership between OpenAI and Apple are reportedly underway, with Apple aiming to make ChatGPT the exclusive AI chatbot integrated into its iOS operating system. This partnership would provide ChatGPT with unique access to features such as Siri prompts on iPhones.
X.AI, known for its chatbot Grok, is a subsidiary of Elon Musk‘s X Corp., which also owns the social media platform formerly known as Twitter. The lawsuit comes amidst a backdrop of ongoing controversies involving major tech companies. Apple is currently facing scrutiny over data access issues in the United Kingdom, while OpenAI’s rival, Anthropic, is embroiled in a lawsuit regarding the use of copyrighted material.
As the legal proceedings unfold, the ramifications of this lawsuit could significantly impact the competitive landscape of both the smartphone and AI chatbot industries. The outcome may also set important precedents for future antitrust actions within the technology sector.
