Eliza Labs, an AI company, has filed a lawsuit against Elon Musk’s X Corp. The firm claimed that the social media platform used its strong market control to shut down its account after taking valuable tech ideas.
The lawsuit, filed on Wednesday in a San Francisco federal court, was initiated by Eliza Labs and its Founder, Shaw Walters. According to the filing, X used key information from Eliza Labs to create similar AI products and then removed the platform later.
The court papers allege that X closed both Eliza Labs and Walters’ accounts without warning or a valid reason. The claims also state that X pushed them to buy an expensive “Enterprise License” or “Enterprise API,” costing $50,000 a month or $600,000 a year, which they refused to pay.
Further, X Corp shut down the firm to stop competition, using its strong market power to avoid legal trouble while blocking users who build AI agents on its platform. The lawsuit calls the incident a planned, dishonest, and unfair move by X to make money and learn about the company’s open-source software, especially its elizaOS system for AI agents.
Eliza Labs, valued at $2.5 billion, is known for its elizaOS and launched a no-code AI agent tool in April, letting people create advanced AI without coding.
Additionally, the complaint says that X’s actions were intended to stifle competition by removing users launching AI agents on its platform, leveraging its dominant market position with apparent immunity from legal repercussions.
Elon Musk’s Ongoing Conflicts
The Eliza Labs case shows growing disagreements in the tech industry about who owns ideas and how fairly companies compete. The outcome might change how social media platforms and AI companies interact in the future. The ongoing court case will reveal more details as it progresses.
This is not the first time that Elon Musk has been in conflict. Musk and his firm X have been involved in various feuds. On August 24, Xai, an Ethereum gaming network, sued Elon Musk’s xAI for trademark infringement and unfair competition.
Musk has also been involved in various feuds with OpenAI’s CEO, Sam Altman. In April, Altman sued Musk, alleging he tried to damage OpenAI. On April 5, Musk countersued, claiming OpenAI shifted to a for-profit model, breaching its original mission. The case, filed against OpenAI, remains active, with a trial set for spring 2026, highlighting tensions between the rival AI leaders.
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