Antitrust Law Daily Wrap Up, ANTITRUST NEWS: X Corp. and xAI accuse Apple and OpenAI of competitive harms, (Aug 26, 2025)

By Wendy Biddle, J.D.

Companies allege exclusive deal creates a monopoly in AI chatbot and smartphone markets.

Elon Musk’s X Corp. and X.AI LLC have filed a federal antitrust lawsuit against Apple Inc. and OpenAI entities alleging an illegal conspiracy to maintain monopolies in both the generative AI chatbot and smartphone markets. In June 2024, Apple and OpenAI announced that Apple would integrate OpenAI’s ChatGPT into Apple’s iPhone operating system (“iOS”). Apple and OpenAI’s exclusive arrangement has made ChatGPT the only generative AI chatbot integrated into the iPhone. According to the complaint, Apple and OpenAI have been working together to maintain their monopolies in the smartphone and AI chatbot markets to prevent innovators like X and xAI from competing. The complaint, filed in federal court in Fort Worth, Texas, seeks billions in damages and injunctive relief (X Corp. v. Apple Inc., No. 4:25-cv-00914-P (N.D. Tex. Aug. 25, 2025)).

X Corp. owns and operates the social media platform X (formerly known as Twitter). X Corp. was acquired by X.AI holdings Corp. in March 2025. X.AI, X Corp. X.AI LLC are all companies under the parent company X.AI Holdings Corp. (collectively X.AI) and are owned by Elon Musk. OpenAI, Inc. is a nonprofit organization. OpenAI, L.L.C. and OpenAI OpCo, LLC are Delaware limited liability companies. OpenAI developed one of the first Artificial Intelligence models that was marketed for personal and business use, known as ChatGPT. Apple Inc. designs, markets, and sells smartphones, tablets and computers.

The plaintiffs contend that Apple and OpenAI entered into an exclusive arrangement in June 2024 that makes ChatGPT the only generative AI chatbot integrated into Apple's iPhone operating system (iOS). This integration, the complaint alleges, prevents competitors from accessing hundreds of millions of iPhone users and the billions of prompts they generate through Siri and other Apple Intelligence features.

According to the filing, Apple holds a 65 percent market share in U.S. smartphones, while OpenAI controls approximately 80 percent of the generative AI chatbot market. The lawsuit characterizes both companies as monopolists who joined forces to protect their respective dominant positions from emerging competitive threats, particularly AI-powered "super apps" that could reduce consumer dependence on traditional smartphones.

The complaint details how ChatGPT receives exclusive access to user prompts through Siri, Apple's Writing Tools, and the iPhone camera application. This exclusivity extends to approximately 1.5 billion daily Siri requests globally, which the plaintiffs argue represents up to 55 percent of all potential generative AI chatbot prompts.

Market dynamics and competitive harm. The lawsuit extensively details how generative AI chatbots operate on network effects and scale advantages. More user prompts lead to better model training, which attracts additional users in a self-reinforcing cycle. By allegedly locking competitors out of iPhone-generated prompts, Apple and OpenAI prevent rivals from achieving the scale necessary to compete effectively.

XAI's Grok chatbot, despite receiving positive reviews and maintaining a 4.9-star rating in Apple's App Store according to the complaint, has captured only a small percentage of the generative AI chatbot market. The complaint attributes this limited market penetration directly to the defendants' anticompetitive conduct, rather than product quality issues.

The filing also alleges that Apple has manipulated App Store rankings to favor ChatGPT while deprioritizing competing applications. Despite Grok ranking as the number 2 free productivity app and X ranking as the number 1 free news app in their respective categories, neither appears in Apple's prominent "Must-Have Apps" section, while ChatGPT does.

The “super app” threat. Central to the plaintiffs' theory is the concept that AI-powered super apps pose an existential threat to Apple's iPhone monopoly. These multi-functional platforms can potentially replace many smartphone features, allowing users to access similar functionality through less expensive devices. The complaint cites internal Apple communications acknowledging that super apps represent a "major headwind" to iPhone sales and could lead to the "commoditization of smartphone hardware."

According to the complaint, Apple Senior Vice President Eddy Cue reportedly expressed concerns that AI developments might render iPhones obsolete within a decade, similar to how the iPhone disrupted Nokia's handset business. By allegedly preventing competitors from developing competitive AI chatbots, Apple and OpenAI are accused of stifling the super app ecosystem before it can mature into a viable alternative to premium smartphones.

Financial arrangements and future plans. The complaint reveals that OpenAI currently provides ChatGPT integration to Apple at no charge, foregoing typical licensing fees because the exclusive access to iPhone users provides greater value than monetary payments. However, the lawsuit alleges that the companies plan to implement a revenue-sharing arrangement, with Apple eventually taking a percentage of ChatGPT subscription revenues generated through iOS devices.

OpenAI strategy documents cited in the complaint indicate plans to increase ChatGPT Pro subscription pricing from $20 to $44 monthly by 2029, representing approximately 20 percent annual price increases. The plaintiffs argue this pricing trajectory demonstrates OpenAI's confidence in its ability to exercise monopoly power without competitive constraint.

Legal claims and requested relief. The complaint includes ten causes of action spanning federal antitrust violations under Sections 1 and 2 of the Sherman Act, civil conspiracy, unfair competition, and violations of the Texas Free Enterprise and Antitrust Act. The plaintiffs seek treble damages, injunctive relief preventing continuation of the alleged anticompetitive conduct, attorneys' fees, and other equitable relief.

Specific claims include unlawful agreements in restraint of trade, monopolization and attempted monopolization of both relevant markets, conspiracy to monopolize, and various state law violations. The complaint emphasizes that the alleged conduct lacks any legitimate business justification and serves only to protect the defendants' respective monopoly positions.

Regulatory context. The lawsuit arrives amid broader regulatory scrutiny of both companies' practices. The complaint references ongoing FTC investigations into OpenAI's data privacy and antitrust practices, as well as the Department of Justice's existing lawsuit against Apple for allegedly maintaining its smartphone monopoly through anticompetitive practices.

The filing also details OpenAI's evolution from a nonprofit organization founded to "benefit humanity as a whole" into a for-profit entity focused on maximizing shareholder returns. This transformation, according to the complaint, coincided with departure of safety-focused personnel and dissolution of internal teams dedicated to addressing AI risks.

The Case is No. 4:25-cv-00914-P.

Judge: Pittman, M.

Attorneys: Alex More (Carrington Coleman Sloman & Blumenthal LLP) for X Corp.

Companies: X Corp.; Apple Inc.

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