Gaming CEO Uses ChatGPT To Dodge $250 Million Payout. This Happens Next

Changhan Kim, CEO of South Korean gaming company Krafton, consulted ChatGPT while trying to find ways to avoid paying a potential $250 million payout bonus to the leadership of Unknown Worlds Entertainment, The Guardian reported. Kim's idea of using a chatbot for such crucial decision-making not just backfired, but it has become an example of the risks of using AI for complex corporate and legal decisions, after a judge in Delaware ordered the company to reverse the removal.

"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.

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KRAFTON acquired Unknown Worlds Entertainment, the makers of the Subnautica video game, for $500 million in 2021. It reported that Krafton would pay them an earnout worth up to $250 million, if they met certain targets.

Internal projections suggested the upcoming release of Subnautica 2 would trigger the payout. So, it wanted to exit the deal.

Instead of following a traditional legal strategy, the company relied on arguments generated with the help of AI tools. As per reports, ChatGPT suggested that Kim form an internal task force, dubbed 'Project X'.

When he was unable to get the leadership to renegotiate the earnout, Krafton removed them. However, the strategy did not hold up in court.

The Delaware judge ruled that the company had acted improperly in trying to terminate the agreement. "The task force's mandate was to either negotiate a 'deal' on the earnout or execute a 'Take Over' of Unknown Worlds," Will stated. "They looked to buy time."

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What did the company say?

"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," a KRAFTON spokesperson told Fortune.

"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 case quickly drew attention in corporate and legal circles because it showed how companies are increasingly experimenting with AI tools like ChatGPT for critical decision-making.

Experts have also warned that AI should not be treated as a substitute for professional legal advice.