Elon Musk’s xAI Sues OpenAI In California, Accuses Rival Of Stealing Trade Secrets

Last Updated:September 25, 2025, 23:32 IST

The lawsuit accused OpenAI of engaging in a “deeply troubling pattern” of hiring former xAI employees to gain access to trade secrets related to its AI chatbot Grok.

Sam Altman and Elon Musk have been engaged in a tough battle of recruiting AI talent.

Elon Musk’s AI startup, xAI, has sued rival OpenAI in California federal court over alleged theft of its trade secrets to gain an unfair advantage in the race to develop artificial intelligence technology.

The lawsuit filed on Wednesday said Sam Altman’s OpenAI is engaging in a “deeply troubling pattern” of hiring former xAI employees to gain access to trade secrets related to its AI chatbot Grok. xAI said it discovered the campaign while probing allegations of trade secret theft against former engineer Xuechen Li.

“OpenAI is targeting those individuals with knowledge of xAI’s key technologies and business plans—including xAI’s source code and its operational advantages in launching data centres – then inducing those employees to breach their confidentiality and other obligations to xAI through unlawful means,” said the lawsuit.

xAI had accused Li of taking confidential information to the ChatGPT maker in a separate lawsuit. According to the complaint, OpenAI recruited former company engineer Jimmy Fraiture, an unnamed senior finance executive, and Li, allegedly to acquire trade secrets from xAI.

Both Fraiture and Li are yet to respond to the allegations.

This came nearly a month after Musk filed a lawsuit against Apple and OpenAI, accusing the two tech giants of colluding to prevent xAI and other artificial intelligence rivals from competing.

Musk had earlier warned about Apple’s alleged anti-competitive policies which has kept ChatGPT at the top of App Store charts but no place for his Grok AI app on the platform, and threatened legal action. He accused the iPhone maker of playing politics with its focus and bias towards OpenAI and ChatGPT.

An OpenAI spokesperson responded to Musk’s allegations, saying, “This latest filing is consistent with Mr Musk’s ongoing pattern of harassment.” Sam Altman had earlier dismissed Musk’s allegations, saying he had heard that X was being manipulated to benefit Musk and his companies.

Musk is also suing OpenAI over its conversion to a for-profit company, while OpenAI has countersued Musk for harassment. The new lawsuit by xAI is part of a broader legal battle between Musk and OpenAI, which he co-founded, and underscores a high-stakes race in Silicon Valley to hire AI-related talent and gain market share in the burgeoning industry.

(with inputs from Reuters)

About the Author

Aveek Banerjee

Aveek Banerjee is a Senior Sub Editor at News18. Based in Noida with a Master’s in Global Studies, Aveek has more than three years of experience in digital media and news curation, specialising in international…Read More

Aveek Banerjee is a Senior Sub Editor at News18. Based in Noida with a Master’s in Global Studies, Aveek has more than three years of experience in digital media and news curation, specialising in international… Read More

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