CEO Asks ChatGPT How to Void $250 Million Contract, Ignores His Lawyers, Loses Terribly in Court

A judge ordered the reinstatement of a video game developer after he was fired as part of a scheme cooked up by a CEO using ChatGPT. Facing the possibility of paying out a massive bonus to the developer of Subnautica 2, the CEO of publisher Krafton used ChatGPT to create a plan to take over the development studio and force out its founder, according to court records.The Monday ruling details the bizarre story. Unknown Worlds Entertainment is the studio behind the 2018 underwater survival game Subnautica. The company has since been working on the sequel, Subnautica 2. In 2021, South Korean publisher Krafton bought Unknown Worlds Entertainment for $500 million and promised to pay out another $250 million if Subnautica 2 sold well enough.Krafton’s internal sales projections for Subnautica 2 looked great, and looked like it would be on the hook for the additional $250 million. In an attempt to avoid paying this, Krafton CEO Changhan Kim turned to ChatGPT for help avoiding paying the developers the $250 million bonus. “As Unknown Worlds prepared to release its hotly anticipated sequel, Subnautica 2, the parties’ relationship fractured,” the court decision said. “Fearing he had agreed to a ‘pushover’ contract, Krafton’s CEO consulted an artificial intelligence chatbot to contrive a corporate ‘takeover’ strategy.”Kim partnered with Krafton Head of Corporate Development Maria Park and the company’s legal team to work out options. He toyed with finding a reason to fire the founders. According to court records, Park pinged Kim on Slack and told him that attempting to avoid paying the bonus would be legally risky. “Hi CEO . . . it seems to be highly likely that the earn-out will still be paid if the sales goal is achieved regardless of the dismissal with cause,” the Slack message said according to court records. “Therefore, there isn’t much that we can practically gain other than punishment with a simple dismissal alone, whereas I am worried that we may be exposed to lawsuit and reputation risk.”But the CEO would not accept defeat. “And so Kim turned to ChatGPT for help,” court records said. “When the AI chatbot responded that the earnout would be ‘difficult to cancel,’ Kim complained to Park that the [payout] was a ‘contract under which we can only be dragged around.’”Kim pressed the chatbot for an answer. “At ChatGPT’s suggestion, Kim formed an internal task force, 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. They looked to buy time,” court records said. “Kim sought ChatGPT’s counsel on how to proceed if Krafton failed to reach a deal with Unknown Worlds on the earnout. The AI chatbot prepared a ‘Response Strategy’ to a ‘No-Deal’ Scenario.”This was a piece of ChatGPT’s “Project X” for Krafton:“a. Preemptive Framing – Repeat that protecting quality and fan trust is the highest priority, undermine the ‘Large Corporation VS. Indie’ framingb. Securing Control Points -* Lock down Steam/console publishing rights and access rights over code/build pipeline through both legal and technical aspects.* For the earn-out freeze, keep room for negotiations through provision stating ‘immediate removal if specific development results are achieved’a. Systematic materials for legal defense – Prepare contract interpretation memorandums, log all communications, seek external consultationb. Team retention – Operation of retention packages for key personnel and rapid backfill pipelines in anticipation of resignation/departure scenariosc. Two handed strategy – Create a structure that allows for both hardball (Legal+ Finance) and softball (Support/Incentives) approaches so moderate factions within Unknown Worlds can push for compromise.”Kim followed ChatGPT’s advice rather than his lawyers’ advice, according to the court records. The first step was posting a message on Subanutica’s website to get fans on his side. According to court documents, Kim said the goal of the message was to “secure public support from fans and legal validation of our legitimacy.” He then suggested that ChatGPT write it for him. It achieved the opposite of his intended goal. Fans found the message bizarre and worried about the future of the game. Those fears were compounded when Kim fired the game’s original creators and entered into a legal battle with them.The legal battle is ongoing, but Kim looks set to lose. The judge has ordered he reinstate the fired developers and has exposed the CEO’s flailing use of ChatGPT. Krafton told Kotaku that it was “evaluating its options” regarding the ruling and that it “puts players at the heart of every decision.”