Eliza Labs, a San Francisco artificial intelligence startup, and its founder, Shaw Walters, have filed a federal lawsuit against X Corporation, formerly known as Twitter, accusing the company of fraud, antitrust violations, and unlawful deplatforming.

The complaint, filed August 27 in the U.S. District Court for the Northern District of California, alleges that X used its control over access to its platform to cut off Eliza Labs from users while obtaining technical information to launch competing products.

Eliza Labs developed software known as “AI Agents,” autonomous programs designed to interact on social media through X’s application programming interface, or API. These tools allow users to automate online engagement, track activity, and create digital assistants. According to the lawsuit, X initially expressed interest in Eliza Labs’ work and held discussions about integrating the tools. Walters says he shared technical details, including the company’s system design and data processes, based on assurances that API access would continue.

In early 2025, X allegedly told Eliza Labs it would need to pay $50,000 per month for a new “Enterprise License” to retain API privileges. When Eliza Labs declined, X suspended the company’s account and Walters’ personal account. The lawsuit claims X then pressed Walters to disclose additional technical information, promising reinstatement that did not occur. Soon after, X introduced its own AI agents, which Eliza Labs alleges incorporated its ideas.

The lawsuit argues that X holds monopoly power in what it calls the market for “short form public posting,” a space dominated by Twitter-style services. The filing says competitors such as Bluesky and Meta’s Threads do not yet have the user base to compete at scale. By suspending Eliza Labs’ access while launching a similar product, the complaint says X used market power to suppress a rival, conduct that plaintiffs argue is prohibited by federal antitrust law.

The complaint also brings state law claims for misrepresentation and unfair business practices. Eliza Labs contends that Section 230 of the Communications Decency Act, which generally shields online platforms from lawsuits over content moderation decisions, does not apply in this dispute. According to the filing, the suspensions were not moderation choices but business actions aimed at eliminating a competitor.

Eliza Labs and Walters ask the court to order X to reinstate their accounts and to bar X from blocking links to Eliza Labs’ website or GitHub pages. They demand a jury trial and seek disgorgement of profits linked to the alleged misconduct, as well as compensatory and punitive damages, and triple damages under antitrust law, along with attorneys’ fees.

X has not yet filed a response.