Eliza Labs Slams X with Antitrust Lawsuit Over Alleged AI Agent Monopolization

Tech giant X faces explosive antitrust allegations as Eliza Labs files suit claiming artificial intelligence market manipulation.

The Core Allegations

Eliza Labs accuses X of systematically cornering the AI agent ecosystem through exclusionary contracts and predatory pricing—effectively freezing competitors out of the market. The lawsuit claims these tactics violate antitrust regulations designed to maintain fair competition.

Market Impact

The case could force major restructuring within X's AI division if courts side with the plaintiff. Meanwhile, investors keep pouring money into centralized AI platforms—because nothing says 'decentralized future' like betting everything on a single corporate black box.

Legal experts predict this could become a landmark case defining how antitrust laws apply to artificial intelligence infrastructures. The outcome might reshape how tech giants operate in the AI space—or just add another line item to their legal department budgets.

Antitrust claims

An antitrust lawsuit challenges practices that harm fair competition, such as monopolies and anticompetitive behavior, to protect consumers and ensure open markets.

Eliza’s complaint alleges X violated Section 2 of the Sherman Act by leveraging monopoly power in short-form social media to suppress AI competition.

The lawsuit details how X suspended Eliza’s accounts in June 2025, then demanded extensive technical documentation under the pretense of account reinstatement.

Walters claims that X used this information to develop nearly identical AI features, including 3D avatars, voice integration, and telephone capabilities, which were launched through xAI’s products.

He added that X requested detailed explanations of Eliza’s framework architecture, endpoint functionality, and implementation specifics while developing competing products.

Remedies include platform restoration

The lawsuit seeks multiple forms of relief, including a declaratory judgment that X lacks Section 230 immunity for anticompetitive deplatforming, injunctions preventing future exclusionary conduct, and account restoration with full platform access.

Monetary remedies include disgorgement of X’s unjust enrichment from copying Eliza’s technology, compensation for fraudulent misrepresentation, and unfair competition damages, as well as treble damages under the Sherman Act provisions.

The plaintiffs also request punitive damages and attorneys’ fees. The lawsuit comes days after Elon Musk’s xAI sued Apple and OpenAI on Aug. 25.

Musk’s lawsuit alleged that the companies conspired to suppress AI competition through Apple’s exclusive ChatGPT integration and App Store favoritism. The lawsuit claims Apple’s partnership with OpenAI makes it “impossible for any AI company besides OpenAI to reach #1 in the App Store.”

The parallel litigation highlights escalating legal battles over AI market control, with Musk pursuing antitrust claims while facing very similar allegations from Eliza Labs.