A young software company has thrown down the legal gauntlet against Elon Musk’s X Corp, claiming the platform siphoned off its ideas before slamming the door on its business.
Eliza Labs, a San Francisco–based startup launched last year, says it built an open-source platform that lets AI agents act and adapt inside social media spaces—something far beyond the reach of traditional apps. According to the lawsuit, X initially courted Eliza, seeking insights into its technology and roadmap. Eliza alleges it shared detailed strategies, only to find itself cut off from the platform months later while X rolled out its own rival AI tools.
The complaint, filed in federal court, accuses X of crossing the line into antitrust territory—using its dominance to suppress competition and strong-arm smaller developers. Central to the dispute is an alleged demand from X: pay $50,000 a month for an enterprise license or lose access. Eliza says this “pay up or get out” tactic crippled its ability to reach users, stunted growth, and fractured customer relationships.
The lawsuit also tries to sidestep the legal shield many tech giants lean on—Section 230. Eliza argues its removal wasn’t about content moderation but a deliberate attempt to wipe out competition in the AI space.
No word yet from X, and Eliza’s lawyers are pressing ahead. The case, Eliza Labs Inc. v. X Corp, now sits before a federal judge in California, setting the stage for what could become a defining battle over AI innovation and the power of platforms to dictate who thrives—or vanishes—on their turf.
