Musk Lawsuit Says OpenAI Holds 80% Chatbot Market Share

In the latest salvo of an ongoing feud with Apple and OpenAI, Elon Musk filed a lawsuit on Monday that alleges the two companies conspired to “buttress their monopolies” in the rapidly expanding AI chatbot market. Musk has increasingly targeted Apple and OpenAI in recent weeks, complaining that Apple has propped OpenAI’s ChatGPT in the App Store while his own chatbot Grok has been effectively blacklisted.

Musk’s suit, filed on behalf of his companies X and xAI, goes much further than griping about App Store rankings. In the complaint, X argues that Apple and OpenAI’s exclusive partnership not only grants ChatGPT access to nearly every iPhone feature while excluding rivals, but also threatens to foreclose Apple’s 1.8 billion users from all competing services. Such a deal, Musk claims, violates antitrust and unfair competition laws and risks upending his long-stated plans to build a super app on Twitter’s massive user base, which he acquired in 2022.

The complaint specifically alleges that Apple has integrated ChatGPT across the entire iOS ecosystem, including as the default chatbot in Siri, Apple’s Writing Tools, and other “everywhere” features. In doing so, Apple granted OpenAI exclusive access to billions of user prompts to train and refine its chatbot model, per the filing. Rival models like Grok cannot get such access, X says, leaving it unable to scale to its full potential. Musk’s filing also points to recent analysis from top AI research firm Anthropic, which put OpenAI’s current market share in chatbots at 80 percent or more.

“Generative AI chatbots would be vigorously competing with one another if Apple and OpenAI had not rigged the market in ChatGPT’s favor,” the lawsuit states. “Instead, defendants’ anticompetitive conduct has handed a substantial portion of the market to ChatGPT.”

Apple has taken this step, X’s lawsuit claims, because it fears the prospect of a successful rival super app from Grok. The complaint alleges that an Apple executive expressed concerns that advances in AI could “destroy Apple’s smartphone business” by making iPhones less essential, much as WeChat has replaced a host of individual smartphone apps in China. The lawsuit suggests that by integrating ChatGPT across its platform, Apple is effectively trying to preserve its iPhone monopoly by giving its only major rival a massive lead in the field of generative AI.

Exclusive Access and Rising Market Share

In its complaint, X compared Apple and OpenAI’s deal to the search engine agreement between Apple and Google that U.S. regulators have long claimed entrenched the search giant’s monopoly. Musk’s filing claims that Apple rebuffed multiple attempts by xAI to allow Grok to integrate with iOS in the same way ChatGPT can, including requests to simply feature Grok alongside other apps in the App Store, even as it was launching a new “Imagine” feature. The lawsuit further accuses Apple of playing a more active role in stifling Grok’s market share by manipulating App Store rankings and withholding software updates to the service.

At risk, Musk claims, is the ability of Grok, and perhaps any other rival chatbots, to compete and grow. X’s lawsuit argues that if Siri handled 1.5 billion user requests globally per day in 2024, and OpenAI has exclusive rights to those prompts, then OpenAI alone has access to 55 percent of all potential chatbot interactions. This would give OpenAI a far bigger jump on rivals in terms of potential training data than when search engine rivals first emerged, with Google’s AdWords having less than 1 percent of search market share when it first launched, per the filing.

X’s lawsuit also paints Apple and OpenAI’s deal as a threat to consumers, who may pay higher monopoly prices for iPhones and less capable chatbots than if Grok and other services were able to properly compete. The complaint further warns that OpenAI has both a current and long-term plan to use its position to extract higher prices from users, citing internal analysis by the open-source research group Stability AI that projected OpenAI would double its “plus” subscription price over the next four years. “That plan would be unfeasible unless OpenAI has power over marketwide prices,” the lawsuit reads.

Musk also alleged in the suit that Apple and OpenAI’s deal would chill investment in rival products. Without a level playing field, investors may see little reason to fund Grok’s competition, leaving them under-resourced and open to poaching by Big Tech, the filing warns.

Another important point raised in the lawsuit: Musk and his companies also don’t see the financial logic in Apple’s OpenAI deal. According to X’s complaint, OpenAI did not charge Apple to put ChatGPT in its iPhone, effectively paying the company to do so. Meanwhile, X argued that Apple is not projecting near-term profits from the deal itself. This suggests to X that Apple and OpenAI are more focused on the broader value of their exclusivity to block rivals and secure their current market dominance than on directly generating revenue.

“The true motive was Apple and OpenAI’s shared goal of blocking competition,” the complaint states. “By making the deal exclusive, Apple sacrificed the profits it would have earned by integrating multiple chatbots.”