Eliza Labs Sues Elon Musk’s X Corp, Alleging Monopoly Abuse and Copycat AI Products

Eliza Labs has filed a lawsuit against X Corp, accusing the Elon Musk-owned company of abusing its dominant position to suppress competition and replicate its technology.

The complaint, filed Wednesday in federal court in San Francisco, claims that X used its platform power to extract sensitive technical data from Eliza Labs before suspending the firm’s account without warning.

X Corp Accused of Pressuring Eliza Labs Into $600K Annual License

The filing alleges that X pressured Eliza Labs and its founder, Shaw Walters, to adopt an “Enterprise License” costing $50,000 per month, or $600,000 annually.

After Eliza declined, its account, along with Walters’, was abruptly suspended. The suit claims this was part of a broader effort to eliminate competition and launch similar AI products under X’s own brand.

“This case involves X Corp wielding its incredible monopoly power with perceived immunity from suit to deplatform users,” the complaint reads, adding that the company sought to “restrain competition” in the race to launch AI agents on its platform.

Eliza Labs is known for elizaOS, an open-source protocol for autonomous AI agents reportedly valued at $2.5 billion.

Shaw is suing X for anti competition

the OG eliza repo used X’s graphQL endpoints (that our front ends query) to read and write to X. It did not use X’s paid API. The repo has been banned off GitHub but forks still live on and are functional

Funny to see Elon bully him here. X… pic.twitter.com/E68UYuJUf1

— AzFlin 🌎 (@AzFlin) August 29, 2025

In April, the company rolled out a no-code AI launchpad aimed at democratizing agent development for non-programmers.

The lawsuit further accuses X of orchestrating a “coordinated, fraudulent, and anticompetitive effort” to gain access to Eliza’s development methods and leverage them for its own offerings. X has not publicly responded to the claims.

Ethereum Gaming Network XAI Sues Elon Musk’s xAI Over Trademark Clash

Last week, Ex Populus, the company behind the Ethereum-based gaming platform XAI,also filed a trademark infringement lawsuit against Elon Musk’s artificial intelligence company, xAI.

The legal dispute centers on alleged marketplace confusion between Ex Populus’s federally registered “XAI” trademark and Musk’s similarly named venture, launched shortly after.

Ex Populus claims Musk’s xAI crossed into its territory when he announced plans to launch an AI game studio in late 2024, amplifying confusion among consumers.

The company noted instances where xAI’s chatbot Grok incorrectly referred to Ex Populus’s XAI brand as part of Musk’s operations, further blurring the line between the two.

The lawsuit also cited reputational damage stemming from Musk’s controversial public persona and incidents involving xAI’s AI assistant making inflammatory remarks.

Ex Populus argued that the confusion has undermined its brand identity and notes that the U.S. Patent and Trademark Office has already suspended some of Musk’s xAI trademark applications.

Meanwhile, xAI has recently voiced plans to sue Apple over alleged antitrust violations, claiming the tech giant unfairly favors OpenAI’s ChatGPT in App Store rankings while suppressing xAI’s Grok chatbot.