Musk Sues Apple, OpenAI, Saying They Hurt AI Competition

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2:29finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio. To one of the most read stories on the Bloomberg Terminal, and that's about Elon Musk accusing Apple and OpenAI in a lawsuit of unfairly favoring the AI company across iPhones and thwarting competition for other chatbot makers. We've got Madeline Meckleberg with us, Bloomberg News legal reporter. She joins us from the Bloomberg Austin, Texas Bureau. Madeline, what's that issue here? We've heard rumblings about complaints from Elon Musk on social media over the last week or so, but now it's official.

3:09What's the complaint say? Right. Nobody should be surprised to see this lawsuit today. Like you say, Elon Musk has been tweeting about it or posting about it, excuse me. But essentially, this lawsuit accuses Apple and OpenAI of forming what he describes as an illegal arrangement that allows both companies to retain monopolies in their respective industries, being smartphones for Apple and artificial intelligence for OpenAI. And it centers on two ideas, basically. He's accusing them of orchestrating this arrangement by having Apple integrate OpenAI into the iPhone's operating system and also by having Apple supposedly prioritize ChatGPT in its app store over other artificial intelligence products.

3:59Are these accusations valid and what would be the legal ramifications here? Right. I mean, these ideas are not happening in a vacuum. We've heard similar allegations made against Apple in the past when it comes to how they wield the power of their app store. And I think if we drill down a little closer into some of the legal arguments here, particularly when we're talking about integration, the argument here is on antitrust grounds. That's what this lawsuit has been brought against. And it's this argument that by using these two powerful companies and having them work together in this way, they're reducing consumer choice because iPhone users have to use ChatGPT if they're on their phone instead of a different AI software.

4:44Maybe they prefer something like Grok or XAI. And they argue also another element of this is that it gives OpenAI a leg up over other AI companies because now they're going to have access to billions of queries and questions submitted by iPhone users that other companies won't have access to. And so it's really about antitrust And this idea that whatever kind of agreement may exist between these companies, it's hurting other people operating and competing in this space, but it's also hurting consumers who lose choice. So what they're looking for here is a core order that would ask Apple and OpenAI to stop operating in this fashion.

5:25So what's interesting about this, and like you said, it's been playing out over the last couple of weeks. In your story, you include a post that I've seen as well by Sam Altman pushing back on the claims that Elon Musk made earlier this month. Elon Musk said Apple's behaving in a manner that makes it impossible for any AI company besides open AI to reach number one in the app store, which is an unequivocal antitrust violation. XAI will take immediate legal action. And Sam Allman pushed back and said, quote, this is a remarkable claim, given what I have heard allege that Elon does to manipulate X to benefit himself and his own companies and harm his competitors and people he doesn't like.

6:04To be fair, there have been stories about what has been highlighted and what hasn't been highlighted on Elon Musk's social media platform. You know, maybe people have noticed that they see a lot of Elon Musk in their feed, even if they don't necessarily follow him in their 4U tab. Or I get ads from Starlink all the time. That's an Elon-owned company. It's known that his companies work together in certain instances. And he's also been outspoken about links from news organizations not working as well on X. So it's a little complicated, isn't it? It's incredibly complicated. And I think this is going to be one of those cases that captures attention from across these industries, but also any industry that touches them or works with Musk's companies, because we're talking about so many huge players who wield so much power and influence in this tech space, but also in this AI space.

6:59And when we're talking about the Sam Altman and Elon Musk of this and how they've gone back and forth publicly trading barbs, that's a feud between these two tech leaders that has gone on for years since they co-founded OpenAI together and split publicly. And this feels like we're just ratcheting up in the tension between these two leaders as it comes to them talking about their products and how they're publicly being perceived and these kind of collaborations that you're talking about. So certainly what happens here, the outcome here is going to be felt everywhere. And it could reflect on Musk's companies as well.

7:35Right. And this isn't the first time we've had these situations where Apple has been called out for its app store potentially promoting or, you know, having a high search for certain companies here, right? That's correct. I mean, Apple is still in a five year legal fight with Epic Games over allegations about its app store's dominance in the smartphone market. And a lot of the complaints that we saw raised today in the ex-Elon Musk lawsuit actually were echoed in a suit earlier a few years ago filed by the Justice Department against Apple that also accused the company of monopolizing the smartphone market and using its power over app distribution to kind of fork innovation that makes it easier for consumers to switch between phones.

8:21And that centers on this idea of blocking things that are known as super apps or everything apps. And this idea that you're creating an app that has a lot of different features that people get from a smartphone. And by blocking those apps from being available publicly, they're able to retain control over those users who might be looking for an alternative to using the smartphone. And so this certainly we're not covering new territory here that much in this litigation. But what's new about it is who the players are and this like huge pivotal moment in time we're at when it comes to AI and figuring out what kind of guardrails need to be on these things moving forward.

9:00Madeline Mecklenburg, Bloomberg News legal reporter. Her story among the most read today on the Bloomberg Terminal, all about Elon Musk pursuing legal action against Apple and OpenAI, saying that they hurt AI competition. She joins us from our Austin, Texas bureau. Stay with us. More from Bloomberg Business Week Daily coming up after this.

9:26What if data didn't sit still? What if intelligence moved with us? Not buried in reports, but activated in real time, where lives are being shaped, where decisions are being made. It all starts with a question. Where is the potential? Coatality turns data into clarity. Intelligence into insight. Insight into action. Because when intelligence moves, we all move forward. Coatality. Intelligence beyond bounds. Hey everyone, it's Cal Penn. I'm the host of Ear Say, the Audible and iHeart Audiobook Club. This week on the podcast, I am sitting down with Ray Porter, the narrator of Andy Weir's audiobook project, Hail Mary.

10:13massive sci-fi adventure about survival and science and what happens when you wake up alone very far from earth. I really had to make a decision because I caught myself getting that frog in my throat and starting to get teary as I'm narrating some of these sections and it's like, okay, yo, yo, yo, is this indulgent? And I really thought about it. I was like, no, at this point it would kind of be betraying the trust the author and the listener have in telling this story if I don't go through it. But there's places in this book that deeply emotionally affected me, and I left it on the mic. That's great.

10:48Because it served the story. People will say like, oh my God, I cried at the end. It's like, yeah, dude, me too. Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartRadio app or wherever you get your podcasts. Aging is real, and so are the benefits of adding vital proteins, collagen, peptides to your daily routine. Because around the age of 30, your body needs backup to keep your collagen up to help support healthy hair, skin, nails, bones, and joints. Available in the classic collagen peptides, collagen and protein shakes, and new Vital Proteins Collagen Sparkling Waters. So you can stay vital, stay you.

11:23Visit vitalproteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease. AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defining tradeoffs shaping the future of AI. Thank you to our presenting sponsor, Salesforce and supporting sponsors, IDA Ireland and Schneider Electric.

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12:02You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Tomorrow we get an update on durable goods orders. Consumer confidence as well from the conference board. Thursday we're going to get US GDP. And on Friday, watch for core PCE. That's just some of what's going on. Some of the data to keep an eye on. watching it all and more. Jennifer Lee, Senior Economist and Managing Director of Economics for BMO Capital Markets. The firm has just over a trillion dollars in assets under management.

12:40Jennifer joins us from Toronto. Jennifer, we're going to get to all of this data, but I want to start with your takeaways from Jackson Hole. For a week ago, we were sitting here saying it's all about Friday. It's all about Friday. It's all about Fed Chair Powell's speech. We got that. Markets breathed a sigh of relief. There was a relief rally, that euphoria around rate cuts certainly easing. What were your takeaways? So first of all, good afternoon, and thank you very much for having me on. And full disclosure, I was actually one of the few people that thought, oh, he's not going to say anything.

13:12What is he going to possibly say? He's going to sort of keep, stay safe. And I was pleasantly surprised. And that's one of the positives that I took away on Friday, just not getting, not just getting some clarity on the trade front, but getting some clarity on where, you know, we see monetary policy going, and he certainly did hint toward a rate cut. He didn't see anything, I don't think, beyond that, but it certainly looks like he is becoming a little more comfortable with a September rate cut. And again, you know, just to use phrases that have been used so many times over the last number of years, you know, we're going to be data dependent, it's going to depend on a meeting by meeting basis, but he was talking about how, you know, the dual mandates are being, you know, it's sort of difficult to wrestle with both dual mandates right now.

13:56But there is more of a downside risk coming from the job side, and he's not as worried, it seems now, from the inflation side, which is kind of interesting. So anyway, definitely more comforted knowing that at least he is starting to think about rate cuts. And although, you know, President Trump did say he was too late. But at least, again, we know that it is most likely going to become data dependent. We still have a few more numbers, by the way, as you mentioned, to keep an eye on before that September 17th date. Jennifer, he's certainly becoming more comfortable with the idea of a rate cut as you're laying out here for us and what we saw last week.

14:28Where do you see monetary policy going? Are you expecting a rate cut next month? What's the cadence afterward, if so? So we haven't changed our forecasts much at all over the last little while. We continue to see two more rate cuts this year, September and December, 25 basis points each and about four next year probably on a quarterly cadence theme I guess like four times next year so and two more times this year so that's sort of how we see the economic landscape playing out right now of course lots can change depending on how some of these trade deals go depending on how inflation pans out what's happening on the jobs front as well but right now I think it's a pretty fair you know safe sort of you know bet to take that you know a couple more a couple of this year, although I don't think every single Fed policymaker is on board with that.

15:18The president late on Friday said the U.S. is conducting a, quote, major tariff investigation on furniture coming into the United States. Just when you kind of thought that there was a little bit of clarity when it came to what was happening with tariffs, there's a new element thrown into this. How big of an effect does that have, in your view, on just the way that countries are thinking about the United States as a trading partner. So I guess it just suggests that, and again, full disclosure, that wasn't even on my radar furniture, but it sort of leans into the whole lumber and steel, you know, tariff category.

15:59But it just gives us a reminder that nothing is off the table in terms of tariffs. And if they are deemed to be, you know, a possible source of national security or whatever, or there's some type of unfairness kicking in, then yes, it's going to be the focus or one of the, it's going to be one of the things that the administration is going to focus on. So we can't get too comfortable with it. And it also suggests that, you know, potentially in the inflation story, we might start seeing those stronger inflationary pressures perc up again in coming months. Because I think there's like 50 days, I believe, that the administration said that they're going to take to start to study this sector.

16:39And if all is found to be in order or not in order, then you can see tariffs being thrown onto the furniture sector. So again, so we could see potentially more inflation playing out. We could see more pressures on the consumer front. And then we're going to have to see how the Fed is going to handle it. Again, how much of the higher prices will be pushed onto the U.S. consumer and whether or not the U.S. consumer can deal with it. Super briefly, I mean, do you believe that the U.S. consumer will be able to deal with this? Of course, we saw a lot of data previously. We didn't really see tariffs being baked in there yet.

17:09So so far, the U.S. consumer has been holding up. And we've been saying for, I don't know, 100 years now, you know, never to underestimate the U.S. consumer. And I still stand by that. Of course, at the same time, it's all going to come down to jobs and whether or not there is going to be continued strong demand for jobs. Wages, especially, that's the one thing I'm going to I want to say about the Friday's report on personal income and spending. I want to keep an eye on the wages and salaries component to see whether or not we're going to still see a solid reading. I think in the prior month, it was a very soft reading, which is a bit disconcerting.

17:39So as long as we continue to see steady gains in wages and salaries, consumers will still be able to suck a little bit away from the rainy day, keep the saving rate around 4 % or so. And yeah, then they can sort of sit back and maybe wait it out a little bit. But at least they can still, as long as they have a job and they can still afford to buy things, I think the U.S. consumer will be in pretty good shape. And I will also say that this whole 90-day pause that the U.S. now has with China, which brings us to November, I think it's November 10th, sort of also puts off some of these higher tariffs onto these U.S.

18:14products as well. So that's good news on the inflation front, although I did see a headline just flashed in front of me about how President Trump is threatening China with 200 percent tariffs. Well, always stay glued. Always stay glued to the terminal for all the latest. Jennifer Lee over at BMO. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

18:40Hey, everyone. It's Cal Penn. I'm the host of Ear Say, the Audible and iHeart Audiobook Club. This week on the podcast, I am sitting down with Ray Porter, the narrator of Andy Weir's audiobook Project Hail Mary, massive sci-fi adventure about survival and science and what happens when you wake up alone very far from Earth. I really had to make a decision because I caught myself getting that frog in my throat and starting to get teary as I'm narrating some of these sections. And it's like, okay, yo, yo, yo, is this indulgent? And I really thought about it. I was like, no, at this point, it would kind of be betraying the trust, the author and the listener have in telling this story if I don't go through it.

19:23But there's places in this book that deeply emotionally affected me, and I left it on the mic. That's great. Because it served the story. People will say like, oh my God, I cried at the end. It's like, yeah, dude, me too. Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartRadio app or wherever you get your podcasts. Aging is real, and so are the benefits of adding vital proteins, collagen peptides to your daily routine. New Vital Proteins Collagen Sparkling Water. Your daily glow-up now in three fresh flavors. Strawberry blossom, lemon lime, and blood orange. Improved skin health in as little as 30 days thanks to collagen peptides?

20:01Cheers to that. Or go with our classic collagen peptides. So you can stay vital, stay you. Visit vitalproteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease. The Bloomberg This Weekend Podcast. News, politics, and the lighter side of Bloomberg. Developers in South Korea, they created dopamine websites. So they basically simulate online shopping without the cost. The food one cracks me up. So you can buy items, but they're never going to arrive. Buy items?

20:32Yeah, it wants you to feel good. You just want to fill that cart. Yeah, fill the cart. It makes you feel good. Does it? The Bloomberg This Weekend Podcast. Subscribe today on Apple, Spotify, or wherever you listen. Amazon Health AI presents Painful Thoughts. Why did I search the internet for answers to my cold sore problem? Now I'm stuck down a rabbit hole filled with images of alarmingly graphic sores in various stages of ooze. I can clear my search history, but I can never unsee that. Don't go down the rabbit hole. Amazon Health AI gets you the right care fast. Health care just got less painful.

21:15This is the Bloomberg Business Week Daily podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. Boeing CEO Kelly Ortberg's campaign to rebuild the company culture is being put to the test by a rise in labor activism. Boeing and union leaders representing striking workers at its St. Louis area defense factories are set to return to the bargaining table today as they aim to end a three-week long impasse. Workers have grievances over pay and pensions that were sacrificed in long-term contracts and the company faces lingering ill will from its past tactics.

22:02We've got with us Sid Phillips, Chief Correspondent for Global Aviation for Bloomberg News. He joins us here in the Bloomberg Businessweek studio. Sid, at the heart of the labor issue here, what exactly is it? Because this is focused on the defense portion of Boeing's business. Yeah, so this is Boeing's defense workers who are on strike. So it's a smaller strike than the one we saw last year when people making the essentially their bread and butter commercial aircraft went on strike. And that was sort of much more hard hitting for Boeing. This is a smaller scale dispute. But at the same time, it is vitally important because Boeing defense business is in the process of being overhauled.

22:44And Kelly Ortberg has talked about how he wants to sort of bring it to a more steady pace of growth, a steady sort of returns. And that's really being put to the test by this stoppage, which is basically affecting output. The lines are still open, unlike when the Seattle strike happened. The lines are still open in St. Louis. But at the same time, output is nowhere near where it should be. Sid, so it seems as though there's some pretty key requests here that they are looking for here at the union to see that Boeing is able to give them. But we're dealing with a three-week-long impasse here. Is this long?

23:17How long can these potentially be drawn out for? I mean, the previous strike went on for 99 days. And so this is not the longest strike that's been that the company's faced. At the same time, it is disruptive for the company is disruptive to the efforts to turn around the company. And it is disruptive for Boeing because there's just one more fire that they need to fight at a time when they're already fighting many fires. You know, they're doing a good job, though, I think analysts and investors would say, of combating some of the issues that the company has had. For all intents and purposes, Kelly Ortberg, analysts and investors would say, has done a pretty good job turning the company around.

23:56And now it finds itself in this unique position as being essentially this bargaining chip when it comes to U.S. trade. It does. I mean, Boeing has sort of turned around the corner since it's massive. It had the grounding of the 737 following those two fatal crashes. The plane came back into service. And last year, we had the door plug blowout, which then sort of put back scrutiny on Boeing. We had the strike last year. So Kelly Otburg has managed to sort of start turning the process of turning the company around. At the same time, the company still has long ways to go before it's actually on a stable footing.

24:28So you say that it has long ways to go. What are you looking for? What are investors looking for here? So investors are looking for when Boeing will be sort of untapped, but it's the FAA at the moment has capped production of the 737 at 38 a month. They're looking to see where the signs are in terms of being able to go to 42 a month and then potentially go to beyond where they were pre-pandemic. Airbus has talked about 75 a month on the competing A320 Neom. So this is where Boeing would sort of, in a scenario where they can actually get everything together, that's where Boeing would be. You and the team last week were the first to report that Boeing is close to ending its sales drought with China.

25:08The story moving Boeing shares as much as 3.7 percent. Boeing said to be in talks to sell up to 500 jets to China. Is that going to happen? We're still waiting to see. I mean, a lot of it depends on the trade negotiations that are underway between the U.S. and China. And we understand that any agreement with Boeing would be conditional on some sort of trade agreement being reached. And Boeing has become emblematic of trade agreements across the world. I mean, we saw that with Qatar. We saw that with other deals where Trump doubts the Boeing angle of it is as part of the wins for the U.S. And so Boeing has become really crucial to U.S.