The Agentic AI initiative Eliza Labs has initiated a legal action against Elon Musk’s xAI, asserting that the AI firm participated in monopolistic behaviors aimed at “deplatforming” agentic AI launchpads.
The legal suit alleges that xAI sought to “extract” essential data, including technical documentation and usage statistics pertinent to the creation of Eliza Labs’ platform, intending to replicate its concepts before “banishing” Eliza Labs from xAI.
Shaw Walters, co-founder of Eliza Labs, contends in the lawsuit that the association between the two entities began harmoniously, with xAI encouraging Walters to exchange ideas. He noted that they leveraged xAI’s application programming interface (API) because it was complimentary. Walters further remarked:
“The collaborative atmosphere shifted to transactional just as X was unveiling Ani and a new iteration of Grok. Out of the blue, they were insisting that we pay $50,000 monthly for an enterprise license — totaling $600,000 annually — or face legal repercussions.
We were already paying them over $20,000 each year via various licenses and fees,” Walters added. Cointelegraph reached out to Walters for further insights, but he opted not to comment further.
The lawsuit underscores the litigious environment within the artificial intelligence landscape, as legal disputes continue to accumulate regarding monopolistic tactics, intellectual property rights, and the legal responsibilities of AI service providers.
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Litigations escalate in the emerging AI field
The AI sector remains in its early stages, with significant regulatory and legal inquiries still unresolved regarding the emerging technology.
These regulatory ambiguities co-exist with traditional legal challenges faced by tech companies, such as trademark and patent violations, positioning the AI industry as a fertile ground for litigation.
In February 2024, Elon Musk filed a lawsuit against Sam Altman, the creator of OpenAI and the organization itself, concerning the proposal for the company to convert into a for-profit entity.
Musk asserted that the organization strayed from its initial mission as a non-profit, open-source initiative intended to generate resources for public benefit.
The lawsuit was dismissed a few months later, in June, but without prejudice, allowing Musk the opportunity to reinstate the lawsuit until it is either dismissed or withdrawn with prejudice.
In July 2024, The New York Times initiated legal proceedings against OpenAI regarding the usage of copyrighted content in the company’s large-language model (LLM), ChatGPT, demanding that comprehensive source material be disclosed for AI-generated outputs.
Xai, an Ethereum-centered gaming firm, sued Elon Musk’s xAI in August 2025 for trademark violations, alleging that the resemblance of the trademarks misled consumers and harmed its business.
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