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A South Korean gaming publisher who hatched a plan using ChatGPT to remove the heads of one of its own game studios in a bid to avoid paying US$250m has been ordered by a US court to reverse the removal.
The dispute stems from South Korean game developer Krafton’s acquisition of Unknown Worlds Entertainment, makers of the Subnautica video game, for $500m in 2021.
Krafton agreed the studio would remain independent and that its leadership would retain operational control and could only be fired for cause, according to the ruling by vice-chancellor Lori Will of the court of chancery in Delaware.
If Unknown Worlds met certain targets, Krafton would pay the studio what is known as an earnout worth up to $250m.
As the studio was last year ramping up to release Subnautica 2, internal projections showed it would trigger the earnout, according to the ruling.
Krafton’s chief executive, Changhan Kim, believed it was a “bad deal” and felt “taken advantage of”, according to the ruling.
Kim was warned by his legal department that the earnout would still need to be paid even if there was a “dismissal with cause” of the Unknown Worlds’ leadership – the co-founders Charlie Cleveland and Max McGuire and chief executive Ted Gill.
He was also warned it would expose Krafton to “lawsuit and reputation risk”.
Kim then turned to ChatGPT for help, Will said in the ruling.
ChatGPT initially responded that the earnout would be “difficult to cancel” but later at ChatGPT’s suggestion Kim formed an internal taskforce, dubbed Project X.
“The task force’s mandate was to either negotiate a ‘deal’ on the earnout or execute a ‘Take Over’ of Unknown Worlds,” Will stated.
“They looked to buy time.”
It also outlined specific actions, including a communications strategy focused on fan trust, securing publishing rights over Subnautica 2 and preparing “systematic material of legal defense”.
“Over the next month, Krafton followed most of ChatGPT’s recommendations,” Will wrote in her opinion.
Unable to get the leadership to renegotiate the earnout, Krafton removed them, alleging they deceived the company about the diminishing amount of time they were spending at the studio, a claim that the judge rejected.
Will ordered operational control be returned to Gill, the CEO of the studio. She also extended the period in which the earnout criteria could be met.
Krafton said in a statement that it disagreed with the ruling and was evaluating its options and remained focused on delivering the best possible game for fans. The company said it was working “tirelessly” to strengthen the Subnautica sequel and prepare it for early access release.
Attorneys for the studio leadership did not immediately respond to a request for comment.
