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

Eliza Labs and his founder, Shaw Walters, complained Elon Musk’s X and claim that the company misled them to transfer technical details about their AI tools, then forbade them from the platform and launched Copycat products.

The court case says that X unfairly used his monopoly power, damaged Eliza’s reputation, his access to customers and investors blocked and benefited from Eliza’s innovations. Eliza Labs does not mention a dollar figure, but asks the court to have X return his ‘unlawful profit’, pay for the losses of Eliza and adds high compensation and punitive damage.

Eliza Labs is the company behind Elizaos, an open-source framework for building autonomous AI agents who can communicate and perform tasks in blockchain networks.

The complaintSubmitted on Wednesday in the American court for the Northern district of California, claimed that Eliza was invited, mined for information and was eventually pushed aside – with its own framework that is reportedly reused for the competing AI product of X, Grok.

The lawsuit claims that X invited Walters at the beginning of 2025 to meet after the open-source tools from Eliza Grip have obtained a grip with developers. With the platform, users can build autonomous AI agents and 3D Avatars with real-time chat, speech, video and telephone integration.

Shortly thereafter, X reportedly demanded an Enterprise license of $ 50,000 a month to continue working on the platform before he screws the accounts of Eliza Labs and Walters for violating X’s general terms and conditions. Internal messages mentioned in the complaint show an X -executive warning that Eliza Labs had activated legal steps for API, non -rewarded government customers and not -approved user cases. Eliza Labs claimed that X then offered to pause that process in exchange for further conversations.

While the bills remained inactive, Walters says that X continued to go for technical documentation with the guise of solving the problem -then she launched almost identical AI agents under his Xai brand.

According to legal expert Kelly Lawton-Abbott, partner at the law firm SSMThe lawsuit breaks new land in the AI ​​space – but is confronted with long opportunities.

“There are not many cases in the AI ​​room about competition,” Lawton-Abbott said Decodeer. “Because Eliza is an open-source software platform, they do not have the same protection of their software that they would have if they were their own.”

According to Lawton-Abbott, the burden of proof in federal antitrust claims is high. “For Antitrust it is a fairly high standard,” she said. “I think that will be a difficult thing for them to succeed.”

Yet Lawton-Abbott said that the lawsuit might be more about leverage than a court case. “I would not expect this to be ahead,” she said. “I think it will probably be used for a scheme.”

Lawton-Abbott also recognized the underlying power dynamics between the companies.

The suit claims that X never responded to Eliza Labs’s request to have his accounts repaired and has launched his own AI agents with comparable functions instead. In July, X’s Artificial Intelligence Division, Xai, ‘Companions’ rolled out, a new function in the Grok Chatbot app. The launch included Ani, a Gothic Anime-Style Avatar that greets users with “Hey Honey!” And Rudy, a hoodie-bearing red panda for more playful interactions.

X Corp. did not respond publicly to the complaint. However, the AI ​​tool, grock, was optimistic about Eliza who prevailed in court.

“This case has intriguing hooks but is confronted with uphill fights, especially against a platform such as X with deep pockets and precedent porter defense.” Said it. “In general, this a 40-50% chance of surviving dismissal fraud/UCL claims are stickier than Antitrust, which often fails against technical giants.”