Eliza Labs, the developer of the elizaOS protocol for autonomous AI agents, has taken legal action against Elon Musk’s X Corp, accusing the platform of misusing its dominance to extract technical knowledge before suspending the company’s account.
The lawsuit, filed in federal court in San Francisco, alleges that X used confidential insights shared by Eliza to roll out copycat AI products while simultaneously cutting off the startup from its platform.
According to the complaint, Eliza and its founder, Shaw Walters, were removed from X in June without notice or explanation.
The filing claims that X’s move was “a coordinated, fraudulent, and anticompetitive effort” to limit rivals in the AI space.
The plaintiffs argue the suspensions damaged customer relationships and stifled business growth at a time when Eliza was gaining momentum.
In the weeks leading up to the ban, Eliza said it was pressured to pay for an “Enterprise License” or “Enterprise API” priced at $50,000 per month, equal to $600,000 annually.
The company refused, calling the demand excessive.
The lawsuit contends that developers were being coerced into costly contracts in order to remain active on the X platform.
Eliza, founded in 2024, has built an open-source system enabling users to create and manage AI agents capable of operating independently across digital platforms.
The company claims that X reached out last year for discussions on how such agents could be integrated.
During those talks, Walters says he disclosed Eliza’s product roadmap and vision, only to later see X introduce similar technology while restricting Eliza’s access.
Anticipating X’s defence, Eliza argues that the company cannot claim legal immunity under Section 230, a statute often invoked by tech firms to protect moderation decisions.
The lawsuit insists the issue was not about content publishing but about “a calculated and cunning” plan to remove competition.
Eliza, now valued at $2.5 billion, has been expanding its reach with tools such as a no-code AI launchpad introduced in April, designed to help users build complex AI agents without programming skills.
The case now sets up a legal battle between a fast-rising software developer and one of the world’s largest social media platforms.
Both X Corp and Eliza Labs have yet to issue public comments on the ongoing dispute.
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