Elon Musk Sues Apple, OpenAI Over iPhone AI 'Monopoly'

By Vismaya V

Elon Musk's X Corp. and xAI filed a federal antitrust lawsuit Monday against Apple and OpenAI, claiming the tech giants entered an exclusive arrangement that blocks competitors from iPhone AI integration while cementing lopsided dominance in the chatbot market.

The complaint, filed in the Northern District of Texas, seeks “billions” in damages and court orders to end what the plaintiffs call an anticompetitive conspiracy between "two monopolists joining forces to ensure their continued dominance."

The lawsuit targets Apple's June 2024 decision to make ChatGPT the exclusive AI chatbot integrated into iOS. 

ChatGPT controls "at least 80 percent" of the generative AI chatbot market while Grok holds only "a few percent" despite claimed superior capabilities, the filing says.

The arrangement gives ChatGPT "exclusive access to billions of user prompts originating from hundreds of millions of iPhones" while shutting out competitors like xAI's Grok, the firms allege.

“Apple’s exclusive ChatGPT deal has left rivals like Grok unable to match the data scale, and they continue to fall behind,” Midhun Krishna M, MLOps engineer at Juno AI, told Decrypt.

The integration gives OpenAI control of the “largest real-time feedback loop,” he added, ensuring “accuracy and dominance.”

The exclusive integration means iPhone users can receive Siri responses powered by ChatGPT, use AI for photo analysis, and access writing tools, all exclusively through OpenAI's technology. 

The lawsuit also accuses Apple of manipulating App Store rankings to favor ChatGPT while suppressing competitors. 

Earlier in August, Musk challenged Apple over App Store rankings, questioning why his apps don't appear in the "Must Have" section despite high rankings.

Despite Grok ranking second in Apple's "Productivity" category and X ranking first in "News," neither appears in the prominent "Must-Have Apps" section where ChatGPT is featured, according to the firms.

They also allege Apple delayed approval for Grok app updates and rejected featuring requests, even when new capabilities were added. 

The complaint quotes former Apple App Store director Phillip Shoemaker acknowledging that rankings are often "arbitrary" and that "Apple has struggled with using the App Store as a weapon against competitors."

Apple fears "super apps" could make iPhones obsolete, threatening its 65 percent U.S. smartphone market share, the filing reads.

OpenAI plans to raise ChatGPT’s premium fee to $44 by 2029, and share revenue with Apple, according to the complaint, which would then collect what it calls “monopoly rents.”

The complaint lists Sherman Act violations such as restraint of trade, monopolization, attempted monopolization, and conspiracy, together with civil conspiracy, unfair competition, and Texas antitrust violations.

X Corp. and xAI are demanding injunctive relief ending the exclusive arrangement and requiring equal integration opportunities for competitors.

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