X Corp. and its subsidiary, X.AI LLC, have initiated a federal lawsuit against Apple and OpenAI, alleging that the exclusive integration of ChatGPT into Apple’s ecosystem violates federal competition laws. Filed in the US District Court for the Northern District of Texas on October 23, 2023, the lawsuit claims that both companies are reinforcing their monopolistic positions in their respective markets.
The plaintiffs assert that Apple commands a substantial 65 percent market share in the US smartphone sector, while OpenAI controls approximately 80 percent of the generative AI chatbot market. Under the Sherman Act, the lawsuit argues that the two companies have unlawfully restrained trade and stifled competition, leveraging their dominant positions to suppress emerging rivals.
The lawsuit alleges that Apple and OpenAI have conspired to monopolize their markets through practices that violate federal antitrust laws. Specifically, it accuses them of entering into contracts and combinations that restrain trade. X.AI contends that Apple has deprioritized its chatbot, Grok, within the App Store by delaying approval for updates and favoring ChatGPT in app rankings.
The complaint draws parallels with the 2001 landmark case involving Microsoft, which was found guilty of monopolistic behavior due to its dominance in the PC operating systems market and its exclusive arrangements with internet service providers. X.AI is seeking a permanent injunction to prevent Apple and OpenAI from engaging in similar anticompetitive practices, as well as damages that could potentially amount to billions of dollars.
Despite the bold claims, X.AI faces significant challenges in proving its case. It must demonstrate that the alleged antitrust injuries stem from reduced competition due to collusion, rather than typical business rivalry. OpenAI’s ChatGPT, launched in November 2022, quickly gained a substantial share of the burgeoning generative AI market. In a move that could escalate tensions, OpenAI has plans for a partnership with Apple, scheduled for June 2024, which would make ChatGPT the exclusive AI chatbot available within Apple’s iOS operating system.
X.AI is part of Elon Musk’s X Corp., which also owns the platform formerly known as Twitter. Grok is positioned as a competitor to ChatGPT in the AI chatbot landscape. This lawsuit comes amid ongoing scrutiny of major tech firms, including Apple, which has faced controversy over data access issues in the United Kingdom. OpenAI’s rival, Anthropic, is also entangled in legal disputes regarding the use of copyrighted material.
The outcome of this lawsuit could have significant implications for the future of competition in the tech industry, particularly in the rapidly evolving fields of generative AI and smartphone technology. As the case unfolds, it will draw attention from industry observers and regulatory bodies alike, highlighting the ongoing debates over market dominance and consumer choice.
