X Hit with Lawsuit Over Alleged AI Theft from Eliza Labs

X Hit with Lawsuit Over Alleged Artificial Intelligence Theft from Eliza Labs

Written by Aaron S.,

Editor-In-Chief

Last Updated: September 01, 2025

Key Takeaways

Eliza Labs claims X used a fake partnership approach to collect its AI tech, then blocked its access and released similar tools through xAI;
The lawsuit said X demanded $50,000 per month to stay on the platform, then suspended Eliza’s accounts after they refused to pay;
While Eliza Labs remained banned, X allegedly kept asking for documents and later launched similar AI avatars in its Grok app.

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Eliza Labs, a company behind ElizaOS, has filed a lawsuit against X, the social media platform owned by Elon Musk.

The firm claimed that X copied its artificial intelligence (AI) tools and cut off its access after gathering key technical information.

The case, brought by founder Shaw Walters, said X reached out under the pretense of collaboration, then shut Eliza Labs out and introduced similar products through its own AI division, xAI.

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The lawsuit was submitted to a federal court in Northern California. According to the filing, X approached Eliza Labs in early 2025 after its open-source software began gaining attention in developer communities.

Eliza Labs stated that X initially asked for technical information and arranged meetings. However, the company later demanded a $50,000 monthly licensing fee if Eliza Labs wanted to keep using the platform.

When Eliza Labs did not comply, both its and Walters’ accounts were suspended. The complaint points to internal messages from an X executive who flagged rule violations involving APIs, clients, and use cases.

Despite the ban, Eliza Labs claims that X continued to request technical documents.

However, Eliza Labs' accounts remained blocked while xAI went on to release a similar product called "Companions" in the Grok chatbot app. The feature includes characters like Ani, a gothic-themed avatar, and Rudy, a red panda mascot.

Eliza Labs argued that X used its control over the platform to restrict competition and gain an unfair advantage.

Recently, xAI was hit with a lawsuit from the Ethereum ETH $4,346.66 -based gaming network Xai. What was the allegation? Read the full story.