Eliza Labs Sues X, Accuses Elon Musk’s Platform of Copying AI and Cutting Them Off

Eliza Labs and its founder, Shaw Walters, are suing Elon Musk’s X, claiming the corporate tricked them into handing over technical particulars about their AI instruments, then banned them from the platform and launched copycat merchandise.

The lawsuit says X unfairly used its monopoly energy, broken Eliza’s status, blocked its entry to clients and traders, and profited from Eliza’s improvements. Eliza Labs isn’t naming a greenback determine, however is asking the courtroom to make X return its “ill-gotten good points,” pay for Eliza’s losses, and add treble damages and punitive damages on high.

Eliza Labs is the corporate behind ElizaOS, an open-source framework for constructing autonomous AI brokers that may work together and carry out duties throughout blockchain networks.



The criticism, filed Wednesday within the U.S. District Courtroom for the Northern District of California, claimed Eliza was invited in, mined for data, and in the end pushed apart—with its personal framework allegedly repurposed for X’s competing AI product, Grok.

The lawsuit claims that in early 2025, X invited Walters to fulfill after Eliza’s open-source instruments gained traction with builders. The platform lets customers construct autonomous AI brokers and 3D avatars with real-time chat, voice, video, and telephone integration.

Quickly after, X allegedly demanded a $50,000-per-month enterprise license to proceed working on the platform, earlier than suspending Eliza Labs and Walters’ accounts for violating X’s phrases and circumstances. Inside messages cited within the criticism present an X govt warning that Eliza Labs had triggered authorized motion for API circumvention, unverified authorities clients, and unapproved use instances. Eliza Labs claimed that X then supplied to pause that course of in alternate for additional talks.

Whereas the accounts remained inactive, Walters says X continued requesting technical documentation below the guise of resolving the difficulty—then launched practically similar AI brokers below its xAI model.

In accordance with authorized skilled Kelly Lawton-Abbott, accomplice at regulation agency SSM, the lawsuit breaks new floor within the AI house—however faces lengthy odds.

“There aren’t many instances within the AI house on anticompetitive conduct,” Lawton-Abbott advised Decrypt. “As a result of Eliza is an open-source software program platform, they don’t have the identical safety of their software program that they might have if it have been proprietary.”

In accordance with Lawton-Abbott, the burden of proof in federal antitrust claims is excessive. “For antitrust, it’s a reasonably excessive commonplace,” she stated. “I believe that’s going to be a tough one for them to succeed on.”

Nonetheless, Lawton-Abbott stated the lawsuit could also be extra about leverage than litigation. “I wouldn’t anticipate this to maneuver ahead,” she stated. “I believe it’s in all probability going to be leverage for a settlement.”

Lawton-Abbott additionally acknowledged the underlying energy dynamic between the businesses.

The swimsuit claims X by no means responded to Eliza Labs’ request to have its accounts reinstated, and as a substitute launched its personal AI brokers with comparable options. In July, X’s synthetic intelligence division, xAI, rolled out “Companions,” a brand new function within the Grok chatbot app. The launch included Ani, a gothic anime-style avatar that greets customers with “Hey babe!” and Rudy, a hoodie-wearing pink panda for extra playful interactions.

X Corp. has not publicly responded to the criticism. Nevertheless, its AI software, Grok, was sanguine about Eliza prevailing in courtroom.

“This case has intriguing hooks however faces uphill battles, particularly towards a platform like X with deep pockets and precedent-favoring defenses.” It stated. “General, this has 40-50% odds of surviving dismissal—fraud/UCL claims are stickier than antitrust, which regularly fails towards tech giants.”