Krafton CEO Uses Chatgpt To Dodge $250 Million Bonus Payout, Ends Up In Hot Water

(MENAFN- Live Mint) A US court has ordered South Korean gaming company Krafton to restore the leadership of one of its own studios after removing them in an attempt to avoid paying a large bonus.

The issue began when Krafton bought Unknown Worlds Entertainment in 2021 for $500 million. The studio is best known for creating the popular game Subnautica. As part of the agreement, Krafton vowed to pay an extra $250 million if the sequel, Subnautica 2, achieved certain sales targets.

The deal also allowed the studio to operate independently, with its leaders staying in charge unless there was a valid reason to remove them.

Concerns over bonus payment

As the sequel moved closer to release, internal forecasts suggested that the bonus conditions would likely be met.

According to a report by Fortune, Krafton's CEO, Changhan Kim, believed the agreement was unfavourable and felt the company had made a poor deal. His legal team warned that removing the studio's leadership would not cancel the bonus payment and could lead to legal trouble.

AI advice and 'Project X' plan

Despite the warnings, Kim turned to ChatGPT for advice. According to court findings, the AI initially said it would be difficult to avoid paying the bonus.

“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.

However, it was later suggested creating an internal strategy, known as“Project X”, to renegotiate the deal or take control of the studio.

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The plan included:

Gaining control over publishing rights on platforms like Steam Taking charge of the game's code Presenting the issue as one of game quality and player trust Preparing legal arguments and public messaging Backlash and Leadership Removal

The plan caused concern within the gaming community, raising doubts about the studio's stability.

Soon after, key leaders - including co-founders and the CEO - were removed from their positions.

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The court criticised Krafton's actions, stating that company leaders must make independent decisions rather than relying on artificial intelligence for major business choices. It ruled that the removals were unjustified.

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Under the ruling, Gill has been restored as CEO and granted the authority to reinstate the co-founders. The earn-out period has also been extended to compensate for the disruption caused.

Krafton responds

Krafton has said it disagrees with the court's decision and is considering its next steps. The company added that it remains focused on delivering the best possible version of Subnautica 2 and is working hard towards its early access launch.

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