Elon Musk’s X Sued by AI Startup Eliza Labs Over $600,000 Demand and IP Theft Claims

• AI developer Eliza Labs is suing X Corp., alleging it uses monopoly power to suppress competitors
• The lawsuit claims X demanded $50,000 a month ($600k/year) for API access, then suspended them
• Eliza Labs also alleges that X copied its open-source AI agent technology after obtaining its data

The artificial intelligence company Eliza Labs and its founder, Shaw Walters, are suing X Corp. in federal court. They allege that the social media platform is using its monopoly power to suppress competition by suspending their accounts and copying key technology.

Lawsuit Claims X Copied AI Tech, Then Suspended Founder’s Account

The court filing asserts that X gained technical information from Eliza Labs and then launched its own similar AI products. The suit claims that very soon after X introduced these competing products, the platform suspended both the corporate account for Eliza Labs and the personal account of its founder, Shaw Walters, without any warning. The complaint argues these suspensions were unjustified and done specifically to limit competition.

The complaint described the suspensions as unjustified and intended to limit competition in the emerging market for AI agents. Eliza Labs said the measures prevented it from reaching users and building on the platform where it had operated.

The $600,000 Shakedown: Lawsuit Details X’s API Access Demand

A central point in the lawsuit is a dispute over platform access fees. Eliza Labs claims it was pressured by X to purchase an “Enterprise License” or “Enterprise API.” The cost for this license was $50,000 per month, which totals $600,000 for a full year. 

The court filing states that Eliza Labs refused to pay this amount. After the refusal, Eliza Labs alleges X used its position to get information about the company’s open-source development while simultaneously removing it from the platform.

This legal fight is happening while X’s own AI division, X.AI Corp., is reportedly in talks to raise $6 billion in a new funding round backed by major venture firm Sequoia Capital.

Who Is Eliza Labs, the $2.5B AI Protocol Suing Elon Musk’s X?

Eliza Labs is the company developing elizaOS, an open-source protocol for autonomous AI agents. The project has reportedly reached a valuation of $2.5 billion. 

In April, the company launched a tool that allows users to create advanced AI agents without needing any programming skills. The lawsuit frames the dispute as a clear case of a dominant technology platform using its power to exclude a smaller rival, claiming X acted “with perceived immunity from suit.”