Krafton's CEO asked ChatGPT how to dodge a $250M earn-out; a court reinstated the studio

In 2021 Krafton, publisher of PUBG, bought Subnautica studio Unknown Worlds Entertainment for $500 million and agreed to pay a further $250 million earn-out if Subnautica 2 hit sales targets. The contract guaranteed the studio's independence, with CEO Ted Gill and cofounders Charlie Cleveland and Max McGuire removable only for cause. Krafton's own projections later showed Subnautica 2 was well on track to trigger the payout.

According to a Delaware Court of Chancery ruling reported by Fortune, Krafton's head of corporate development warned CEO Changhan Kim that dismissal with cause would not erase the earn-out without 'lawsuit and reputation risk'. Kim, fearing a 'pushover' contract, bypassed his legal team and asked ChatGPT, which called the earn-out 'difficult to cancel' and, pushed further, produced a takeover plan called 'Project X'. His own team warned him the strategy was dangerous.

Gill, Cleveland and McGuire were removed without what the court found was legitimate cause. On 17 March 2026 the court ordered Gill reinstated as CEO, with authority to bring back the cofounders, and extended the earn-out period. Krafton said it respectfully disagreed and was evaluating its options, noting that the former executives' damages and Subnautica 2 earn-out claims remain pending.

Delaware court ordered Gill reinstated, with authority to bring back the cofounders; earn-out period extended; damages claims pending

The earn-out was set to cost $250M once Subnautica 2 sales hit targets, and Krafton's own projections showed it would.

The CEO regarded the deal as a 'pushover' contract and looked for a way out instead of paying.

He bypassed his own legal team and relied on ChatGPT for a takeover plan, despite warnings from colleagues that it was dangerous.

The studio leaders were removed without cause even though the contract allowed removal only for cause.

Using a chatbot to find a way around a contract you signed turns a business problem into a legal one. Courts expect independent human judgment, and ignoring your own lawyers makes it worse.

The court found Krafton improperly ousted the Unknown Worlds leadership, and Fortune notes the judge said executives are expected to exercise independent human judgment and not outsource good-faith decisions to an AI. Krafton disagreed with the ruling and said the damages and earn-out claims remain unresolved, with further litigation pending. The fan-facing message that ChatGPT helped write alarmed the gaming community, Fortune reports.