Xai filed a new lawsuit against Openai in federal court in California, accusing the company of systematically poaching employees and stealing confidential business information. The complaint was filed Wednesday in U.S. District Court for the Northern District of California.
The Elon Musk-led artificial intelligence company claims Openai illegally targeted former Xai employees, including engineers Xuechen Li and Jimmy Fraiture, along with a compiled former senior executive who was considered former CFO Mike Liberatore.
According to the filing, Openai was trying to access Grok’s source code, internal business strategy, and data center operations through “deeply troubling patterns” recruiting former employees.
“Openai targets individuals with knowledge of Xai’s key technologies and business plans. This has operational benefits in launching Xai source code and data centers, and subsequently steering those employees to infringe other obligations to Xai through illegal means,” the complaint states.
A spokesman for the defendant company denied the fraudulent conduct, calling the lawsuit “the latest chapter in Musk’s ongoing harassment.”
Over the past two years, there has been a long-term feud between Elon Musk and Open leadership Sam Altman. Musk, who co-founded Openai before resigning from the company in 2018, attempted to convince the court to shut down CEO Altman’s decision to change the organization’s business model to a non-profit business.
Xai proposed that Openai violated both federal and California state laws by guiding former employees to share confidential information. The complaint identified Li, Fraiture and senior financial enforcers as examples of staff adopted by Openai to gain access to Xai’s trade secrets.
“By hook or crook, Openai does anything when threatened by better innovators, such as Xai’s technological advancements, source code, or business plans, or misappropriation,” the complaint read.
Musk chased Openai and Apple leaked a leaked email
The case also included communication between Musk’s legal team and former Xai executives. Screenshots of an email from Musk’s lawyer Alex Spiro were sent in July, so the former executive accused him of violating his secret obligations and responded in a short email saying, “I’ll suck my penis.”
“We sent them many warning letters, but they continued to misconduct. After exhausting everything else, lawsuits were the only option,” said CEO Musk I wrote it X Thursday.
About a month ago, the Grok developer slapped Apple in another lawsuit, filed in US District Court for the Northern District of Texas. Apple accused them of manipulating the App Store rankings in favor of Openai’s ChatGpt while suppressing rivals like Grok.
“Apple is working with companies that benefit most from hindering AI: Openai’s competition and innovation, Openai is the monopoly of the AI chatbot market,” Filing said.
Musk threatened to directly sues Apple earlier that month, claiming that it made top App Store rankings impossible by making “clear antitrust violations” effectively impossible to compete with AI applications.
Apple is the gateway to the internet half of America. They make it impossible for other AI companies to succeed by mercilessly promoting Openai in every way! https://t.co/p6wdoluzo5
– Elon Musk (@elonmusk) August 12, 2025
Apple denied the claim, saying that its operation of the App Store was “fair and unbiased.” Openai CEO Sam Altman responded to Musk’s accusations in a statement posted earlier this month.
“This is a surprising argument given that I’ve heard Elon is trying to manipulate X to benefit himself and his own company and harm people he doesn’t like,” writes Altman.
Xai contemplates expansion into government contracts
Elsewhere, Xai through a statement about X released on Thursday evening announcement They were launching Xai for Government, a program designed to provide access to federal agencies to the Frontier AI model.
According to the announcement, all federal departments and agencies can use GROK 4 and GROK 4 at a high speed for 18 months at a rate of $0.42 per department. The initiative also includes hiring and allocating a team of GROK engineers to help institutions integrate and maximize the capabilities of their model.
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