Elon Musk's artificial intelligence company, xAI, has filed a lawsuit against OpenAI, accusing the company of trade secret theft and unfair competition. The lawsuit, filed in California federal court, alleges that OpenAI engaged in a "deeply troubling pattern" of hiring away former xAI employees to gain access to confidential information, including source code and operational advantages related to xAI's Grok chatbot. xAI claims OpenAI is attempting to gain an unfair advantage in the competitive AI market.
The complaint specifically names former xAI engineers Xuechen Li and Jimmy Fraiture, as well as an unnamed senior finance executive, accusing them of misappropriating proprietary data and taking it to their new roles at OpenAI. xAI had previously sued Xuechen Li in August 2025 for allegedly stealing the company's entire codebase. xAI's latest complaint alleges that it discovered OpenAI's campaign to undermine the company while investigating Li.
xAI's lawsuit alleges that OpenAI targeted individuals with knowledge of xAI's key technologies and business plans, including xAI's source code and its operational advantages in launching data centers. The lawsuit states that OpenAI induced these employees to breach their confidentiality and other obligations to xAI through unlawful means. xAI claims that OpenAI is targeting those individuals with knowledge of Grok's technology and internal business operations, including approaches to rapid data center deployment.
Musk explained his reasoning behind the lawsuit in a post on X, stating that "Lawsuit was the only option after exhausting all others". xAI's lawsuit alleges that OpenAI poached xAI engineers, pressured them to share confidential information, and gained access to the company's code, business plans, and data center details. The lawsuit reads, "By hook or by crook, OpenAI clearly will do anything when threatened by a better innovator, including plundering and misappropriating the technical advancements, source code, and business plans of xAI".
OpenAI has rejected xAI's allegations, characterizing the lawsuit as the latest chapter in Musk's ongoing harassment of the company. An OpenAI spokesperson stated, "This new lawsuit is the latest chapter in Mr. Musk's ongoing harassment. We have no tolerance for any breaches of confidentiality, nor any interest in trade secrets from other labs".
This lawsuit is the most recent development in the ongoing feud between Musk and OpenAI CEO Sam Altman. Musk co-founded OpenAI with Altman and Greg Brockman but has become increasingly critical of the company's direction since it transitioned to a for-profit model. In the past, Musk has accused OpenAI of prioritizing profits over its original mission of developing AI for the benefit of humanity. The current legal battle highlights the rising tensions and increasing competition in the generative AI sector.
