By Tom Hals
WILMINGTON, Delaware, March 16 (Reuters) – A Delaware judge ordered on Monday that South Korean game developer Krafton Inc reinstate the head of one of its video game studios, ruling he had been improperly removed as part of a takeover plan hatched by ChatGPT.
Krafton’s CEO Changhan Kim had largely followed the advice of AI tool ChatGPT during a $250 million dispute with the leaders of the “Subnautica” game maker Unknown Worlds Entertainment, which Krafton had acquired, according to the ruling by Vice Chancellor Lori Will of the Court of Chancery in Delaware.
Businesses and governments are scrambling for new ways to use artificial intelligence, and the technology has been blamed for mass layoffs, fears of autonomous weapons and concerns about civil rights. Companies caught in takeover-related legal battles often spend millions of dollars on teams of attorneys and advisors from top-flight Wall Street firms.
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.
The dispute stems from Krafton’s acquisition of Unknown Worlds Entertainment for $500 million up front in 2021. Krafton agreed the studio would remain independent and that its leadership — co-founders Charlie Cleveland and Max McGuire and CEO Ted Gill — would retain operational control and could only be fired for cause, according to Will’s ruling. If the company met certain targets, Krafton would pay what is known as an earnout worth up to $250 million.
As the studio last year was ramping up to release “Subnautica 2,” internal projections showed it would trigger the earnout, according to the ruling. Krafton’s CEO Kim feared he was caught in a “pushover” deal and in June turned to ChatGPT to get out of it.
“Over the next month, Krafton followed most of ChatGPT’s recommendations,” Will wrote in her opinion.
As the chatbot suggested, the company formed an internal task force to negotiate a new deal or execute a takeover of the studio. 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.”
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.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Daniel Wallis and David Gregorio)
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