Elon Musk’s xAI is being sued by Eliza Labs for alleged monopolistic practices and attempts to extract valuable information. Eliza Labs co-founder Shaw Walters claims that the relationship turned sour when xAI demanded a hefty fee for an enterprise license or threatened legal action, despite their previous collaboration.

The lawsuit underscores the legal battles within the AI industry, particularly around monopolistic practices and intellectual property rights. The sector is still in its early stages, with regulatory uncertainties and traditional legal issues like trademark infringement contributing to the litigious environment.

In a similar case, Elon Musk sued Sam Altman and OpenAI in 2024 over the company’s shift from a non-profit mission to a for-profit enterprise. Musk argued that OpenAI strayed from its original purpose of creating tools for public benefit.

The lawsuit was withdrawn in June but can be reintroduced until dismissed with prejudice. In July 2024, The New York Times took legal action against OpenAI, demanding detailed source material for AI-generated content. In August 2025, Xai sued Elon Musk’s xAI for trademark infringement, citing confusion among consumers.

Read more at Cointelegraph: Eliza Labs Files Lawsuit Against Musk’s xAI Alleging Monopolistic Behavior