The complaint seeks damages exceeding $75,000 and immediate restoration of the account. A federal antitrust lawsuit was filed against social media platform X on August 27 by Eliza Labs and founder Shaw Walters.
According to the lawsuit, the plaintiffs are alleging that technical information about their AI agents was fraudulently extracted by the social media platform before they were deplatformed and competing products were launched.
Damages exceeding $75,000 are being sought by the complaint, along with immediate restoration of the account.
In an August 28 statement, Walters described the lawsuit as a last resort after months of failed negotiations.
“X and xAI realize this on some level – they just filed a lawsuit alleging that Apple and OpenAI are doing the same anticompetitive conduct to them that X is doing to us.”
He said:
Walters added that X initially invited collaboration after seeing widespread adoption of Eliza’s open-source AI agent framework.
Following meetings at X headquarters in February, a $600,000 annual enterprise license was demanded from Eliza by the platform, despite it already paying over $20,000 annually in fees.
Antitrust Lawsuits Raise Concerns Over AI Market Control
Practices that harm fair competition, such as monopolies and anticompetitive behavior, are challenged by an antitrust lawsuit 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 Eliza’s accounts were suspended by X in June 2025, and then extensive technical documentation was demanded under the pretense of account reinstatement.
Walters claims that this information was used by X to develop nearly identical AI features, including 3D avatars, voice integration, and telephone capabilities, which were launched through xAI’s products.
He added that detailed explanations of Eliza’s framework architecture, endpoint functionality, and implementation specifics were requested by X while competing products were being developed.
Lawsuit Seeks Platform Restoration and Damages
Multiple forms of relief are being sought by the lawsuit, 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.
Punitive damages and attorneys’ fees are also requested by the plaintiffs. The lawsuit comes days after Elon Musk’s xAI sued Apple and OpenAI on August 25.
A lawsuit by Musk alleged that the companies conspired to suppress AI competition through Apple’s exclusive ChatGPT integration and App Store favoritism. The lawsuit claims that it is “impossible for any AI company besides OpenAI to reach #1 in the App Store” because of Apple’s partnership with OpenAI.
The parallel litigation highlights escalating legal battles over AI market control, with Musk pursuing antitrust claims while facing very similar allegations from Eliza Labs.
