AI cryptocurrencies plummet following Elon Musk's lawsuit against Apple and OpenAI.
AI cryptocurrencies fell sharply on Tuesday, nearly recording double-digit losses and effectively marking the sector as the worst performer.
This follows the antitrust lawsuit filed by X Corp. and Elon Musk's xAI against Apple and OpenAI, accusing them of monopolizing access to artificial intelligence (AI) on iPhones.
💥AI tokens plummet following Musk's antitrust clash with Apple and OpenAI.
The case, filed in the Northern District of Texas, targets Apple's June 2024 decision to make OpenAI's ChatGPT the exclusive integrated AI chatbot on iOS.
According to the lawsuit, this agreement excludes competitors like Grok from xAI. It gives OpenAI 'billions of user requests' from iPhone users. Furthermore, the agreement provides OpenAI control of over 80% of the generative AI chatbot market.
Based on this, the plaintiffs argue that Apple and OpenAI engaged in an 'anticompetitive conspiracy.' Supposedly, they grant ChatGPT privileged access to Siri and core iPhone functions.
Therefore, in their lawsuit, they seek 'billions' in damages and pursue judicial relief to dismantle the exclusive integration. They see it as a barrier to innovation and consumer choice.
The sentiment is that this agreement harms rivals like Grok, unable to match the scale of data. Additionally, it gives OpenAI an unfair advantage, a broad real-time feedback loop that could enable dominance.
It is reported that Apple also manipulated App Store rankings to suppress competing apps.
Despite Grok having over a million reviews, an average of 4.9 stars, and second place in Apple's 'Productivity' category, Musk claims the app has been excluded from the 'Essential Apps' section where ChatGPT is featured.
Notably, Grok's capabilities recently attracted the messaging platform Telegram, which had unsuccessfully attempted integration.
Beyond App Store practices, the lawsuit claims that Apple is preparing to charge 'monopoly rents' through revenue-sharing agreements tied to ChatGPT's premium service. This is projected to rise to $44 per month by 2029.
Apple, which controls about 65% of the smartphone market in the U.S., reportedly sees potential super apps like Grok as existential threats to iPhone dominance.
The lawsuit cites multiple violations, including trade restraint, monopolization, and unfair competition under federal and Texas law.
The market capitalization of the sector falls by more than 7%.
According to data from CoinGecko, the aggregate market capitalization of AI-linked tokens fell by more than 7%. This suggests that the effects of the lawsuit were quickly felt in the crypto markets.
This includes projects linked to decentralized computing platforms and machine learning.
Traders cited fears that increased antitrust scrutiny and corporate infighting could dampen investor enthusiasm for AI-focused crypto plays.
The opposite is true, with positive developments such as positive earnings reports for companies in the AI space boding well for the crypto coins in the sector. Similarly, AI tokens surged in February amid Elon Musk's $97 billion acquisition bid for OpenAI.
Nevertheless, reactions in the tech and crypto sectors remain divided. Some see Musk's lawsuit as a legitimate challenge to established monopolies. Meanwhile, others view it as a tactical move to elevate Grok's visibility.
“Apple's refusal to embrace innovation and success only shows how they will fall behind, like all those before them,” wrote analyst Jacob King on X.