Eliza Labs is suing X Corp, alleging theft of its open source AI platform elizaOS and anti-competitive practices aimed at eliminating a smaller rival.
On August 27, 2025, Eliza Labs and founder Shaw Walters filed an antitrust lawsuit against X Corp in the U.S. District Court for the Northern District of California. The complaint accuses X of exploiting its dominant social media position to extract proprietary information, demand unaffordable fees, suspend Eliza’s accounts, and launch competing AI products under its xAI brand.
According to the lawsuit, X engaged in a “coordinated, fraudulent, and anti-competitive effort” to obtain money and technical information from Eliza Labs. The company was asked to purchase an “exorbitantly expensive Enterprise License” for $50,000 per month. Plaintiffs allege this was a pretext to remove them from the platform, followed by permanent account suspensions described as a “calculated and cunning” attempt to “destroy competition.” The complaint stresses that this was not content moderation but a strategic business move “to restrain competition.”
Eliza Labs further claims that X’s new AI products are “nearly identical” to its own technology, citing 3D avatars, voice and video support, and telephone integration as features replicated from Eliza’s proprietary work. The complaint argues that X first leveraged Eliza’s knowledge and then sidelined the company by cutting off access.
Founded in 2024, Eliza Labs is best known for elizaOS, an open source platform enabling the creation and deployment of autonomous AI agents on social media. It also launched auto.fun, a no-code platform for building and monetising AI agents. The company contends that X’s actions have severely harmed its operations, reputation, and ability to secure funding.
The case adds an ironic twist: X’s owner Elon Musk recently sued Apple and OpenAI for alleged anti-competitive behaviour. As Musk positions himself as a defender against gatekeeping, his own company now faces accusations of shutting out open source innovation. The outcome could reshape protections for open source developers battling platform monopolisation in AI.
