In his latest salvo against Apple and OpenAI, Elon Musk has upped the ante by filing a lawsuit on Monday that charges the two companies with conspiring to entrench monopolies in the rapidly expanding AI chatbot market. The suit, filed just days after Musk blasted Apple on X for a double standard of promotion for OpenAI’s ChatGPT and his own chatbot Grok, claims Apple and OpenAI entered into an exclusive agreement that gives ChatGPT “extraordinary access to Apple’s iPhone and iOS services,” unfairly bolsters OpenAI’s market position, and threatens Musk’s own plans for a super app based on Twitter.

Filed on behalf of Musk’s companies X and xAI, the complaint goes well beyond App Store rankings. It alleges that Apple has not only elevated ChatGPT to a “default chatbot” for iOS users in search, Siri, Apple’s Writing Tools, and other features, but it has also opened up a previously closed API, allowing OpenAI to collect trillions of user prompts and messages on iPhones and potentially leverage that massive trove of data to crush rivals. According to the lawsuit, the arrangement violates antitrust and unfair competition laws and threatens to foreclose Musk’s vision of an “everything app” that he has long promised to build atop Twitter since he purchased the social media company in 2022.

The complaint accuses Apple of not only effectively handing over a huge volume of chatbot user prompts and data to OpenAI, but also of preventing or stifling access for competitors in myriad other ways. It details how Apple rejected repeated attempts by xAI to integrate Grok with iOS and allowed Apple to manipulate App Store rankings and delays to Grok updates and integrations in order to promote ChatGPT. “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.”

Musk Alleges Super App Monopoly Fears

X also contends that Apple is acting out of fear of a successful rival super app that could one day reduce the need for iPhones, much like WeChat in China has become an all-in-one substitute for many standalone smartphone apps and services. The complaint even quotes Apple executive Eddy Cue as reportedly having said during internal discussions that advances in AI posed a risk of “destroying Apple’s smartphone business.” According to Musk’s filing, the deal is part of a “coordinated effort to protect Apple’s existing monopolies and to help OpenAI obtain a new one.”

Exclusive ChatGPT Deal Expands Market Share

The lawsuit also compares the arrangement to Apple’s previous exclusivity agreement with Google for search, which U.S. regulators have long argued entrenches the latter’s dominance. The complaint argues that the current OpenAI deal is the “mirror image” of that one, and Apple already controls at least 80 percent of the generative AI market. It claims that access to Apple’s integrated user base is key to any chatbot’s success in the current generation of AI models.

Apple customers, the filing warns, may end up with fewer choices and less capable chatbots as a result of the deal, which may also help both companies to maintain monopoly pricing for iPhones and subscription services. For example, OpenAI reportedly plans to double its “plus” subscription over the next four years. “That plan would be unfeasible unless OpenAI has power over marketwide prices,” the lawsuit says.

Apple Invested in OpenAI in 2023

The suit also argues that Apple’s exclusive deal with OpenAI could have a chilling effect on investment. If Apple continues to “press its thumb firmly on the scale in favor of ChatGPT,” it may become clear to outside investors that there’s no value in backing potential rivals. They would have a hard time beating a super app that’s already in a virtual stranglehold over Apple’s customer base, effectively denying other startups the resources they need to scale. That, the lawsuit argues, could lead to talent loss as Big Tech firms poach developers and startups from other startups.

“The value of the agreement to Apple and OpenAI is derived not from any specific feature or improvement in performance but, rather, from their joint ability to block competing chatbots,” the complaint states. “By making the deal exclusive, Apple sacrificed the profits it would have earned by integrating multiple chatbots.” In short, X is alleging that both Apple and OpenAI are acting in bad faith to protect their mutual market positions.

Future of Chatbots Threatened

For Musk, the stakes are clear. “If left in place, Defendants’ conduct will likely foreclose Grok from fairly competing in the market for chatbots and related applications, services, and functionality,” the filing states. “The inability of Grok to compete with ChatGPT affects X’s future, since, because Grok’s functionality is a key feature of the X app, the X app is more attractive the better Grok performs.”

Musk’s companies are seeking more than $2.4 billion in damages, as well as a permanent injunction blocking Apple’s exclusive integration of ChatGPT, along with any changes to the App Store rules or algorithms that are alleged to have “artificially deflated X’s ranking and market share.” OpenAI, which Musk once co-founded and which has had its own historic ties to Apple, dismissed the filing in a statement to Ars Technica as “part of Elon Musk’s ongoing pattern of harassment,” while Apple did not respond to a request for comment.

Whether or not a court sides with Musk in his latest legal action could determine not only the future of Grok but also whether the field of AI chatbots and the broader generative AI market will be effectively open to vigorous competition in the next wave of innovation.