When Changhan Kim, CEO of the South Korean gaming company KRAFTON, decided he needed a way out of a costly acquisition deal, he didn’t call his lawyers—he opened ChatGPT. The result is one of the most striking cautionary tales about AI-assisted decision-making in corporate America, and it ended with a Delaware judge ordering the company reverse everything it had done.
A Delaware judge found Kim used ChatGPT to engineer the removal of Unknown Worlds Entertainment—the indie studio responsible for the underwater survival game Subnautica—CEO Ted Gill from the company to dodge a $250 million bonus payout.
“Fearing he had agreed to a ‘pushover’ contract, KRAFTON’s CEO consulted an artificial intelligence chatbot to contrive a corporate ‘takeover’ strategy,” Delaware’s Court of Chancery Vice Chancellor Lori Will wrote in a ruling on Tuesday.
In 2021, KRAFTON, the publisher behind the global phenomenon PUBG: Battlegrounds, acquired Unknown Worlds Entertainment for $500 million. As part of the deal, KRAFTON agreed to pay an additional $250 million earn-out bonus if the studio’s hotly anticipated sequel, Subnautica 2, hit certain sales targets. The contract also guaranteed that Unknown Worlds would remain independent, with cofounders Charlie Cleveland and Max McGuire, along with Gill, retaining operational control—and only being removed for cause.
Usually, it’s a good thing to hit and even exceed sales targets, but for KRAFTON, trouble started when their own internal sales projections showed Subnautica 2 was well on track to trigger that payout. When Maria Park, KRAFTON’s head of corporate development, told Kim a “dismissal with cause” would not rid the company of its $250 million bonus obligation without exposing the company to “lawsuit and reputation risk,” Kim looked toward an AI chatbot for guidance.
Kim, spooked by what he privately called a “pushover” deal, bypassed his own legal team and turned to ChatGPT for help. When the AI chatbot responded that the earnout would be “difficult to cancel,” the ruling read, Kim didn’t accept the answer. He pushed further—and the chatbot obliged with a detailed, multi-stage corporate takeover strategy dubbed “Project X.”
Project X
ChatGPT advised Kim to form an internal task force to renegotiate the earnout or force a studio takeover; if negotiations failed, to “lock down” Steam and console publishing rights and control over the game’s code; to frame the entire conflict as being about “fan trust” and “quality” rather than money; and to prepare systematic legal defense materials while logging all communications. The chatbot even suggested drafting a public-facing message to win over Subnautica fans—a message Kim then asked ChatGPT to write. It backfired spectacularly, alarming the gaming community and heightening suspicions that something was deeply wrong at the studio.
Throughout this process, Kim’s own team warned him the strategy was dangerous, but Kim pressed ahead anyway. Cleveland, McGuire, and Gill were all removed from their roles without what the court determined was legitimate cause.
Will found KRAFTON had improperly ousted the Unknown Worlds leadership, and noted company executives are expected to exercise independent human judgment—not outsource good-faith decisions to an AI. Gill has now been ordered reinstated as CEO, with the authority to bring back the cofounders. The earnout period has been extended to account for the disruption.
In a statement sent to Fortune, a KRAFTON spokesperson said, “KRAFTON puts players at the heart of every decision, and that will never change. Over the past several months, KRAFTON and the Unknown Worlds team have worked tirelessly to strengthen the game and prepare it for an Early Access release.”
“While we respectfully disagree with today’s ruling, we are evaluating our options as we determine our path forward. Today’s ruling does not resolve the former executives’ claim for damages or an earnout related to Subnautica 2, with further litigation still pending,” the statement continued.
Unknown Worlds had not yet responded to Fortune’s requests for comments. As of Tuesday morning, KRAFTON’s contact page was “temporarily offline.”
This article has been updated with a statement from KRAFTON.
