Elon Musk’s artificial intelligence startup xAI has filed a new lawsuit against OpenAI, accusing the company and its CEO Sam Altman of engaging in a “pattern” of hiring away former xAI employees to gain access to confidential information.
According to a complaint filed in a California court and reported by The Guardian, xAI alleges that OpenAI has deliberately recruited at least eight of its former staff members, including engineers and a senior finance executive, to obtain sensitive trade secrets. The lawsuit claims these include source code for xAI’s chatbot Grok as well as business strategies related to data center operations.
“OpenAI is targeting those individuals with knowledge of xAI’s key technologies and business plans … then inducing those employees to breach their confidentiality and other obligations to xAI through unlawful means,” the filing states.
The dispute comes amid a history of tensions between Musk and Altman, who co-founded OpenAI together in 2015 before Musk left the company three years later. Musk has since sued OpenAI multiple times, including a 2024 lawsuit that accused the company of abandoning its nonprofit mission in favor of pursuing profits. That case was later dropped, though Musk has continued to raise concerns over OpenAI’s governance and business practices.
The latest case stems from an internal xAI investigation into one of its former engineers, Xuechen Li, who was accused of misappropriating trade secrets. xAI claims that inquiry revealed what it describes as a broader, systematic effort by OpenAI to recruit key employees with knowledge of proprietary systems.
Hiring staff from competitors is not illegal, but a company bringing such claims must prove a targeted effort to obtain trade secrets through employee recruitment. OpenAI, for its part, has denied the allegations, calling the lawsuit “the latest chapter in Mr. Musk’s ongoing harassment.”
This is not the only courtroom battle between the two companies. Last month, Musk also filed a separate lawsuit against OpenAI and Apple, alleging the firms colluded to keep ChatGPT prominent on Apple’s App Store while restricting the visibility of xAI’s Grok app.
The litigation highlights the intensifying rivalry in the AI sector, where leading firms are competing for both technological breakthroughs and top engineering talent. Analysts note that with companies like OpenAI, xAI, and others struggling to overcome persistent challenges such as AI “hallucinations,” the fight for experienced personnel is becoming increasingly fierce.
