"Fearing he had agreed to a 'pushover' contract, Krafton's CEO consulted an artificial intelligence chatbot to contrive a corporate 'takeover' strategy. A Delaware judge found Kim used ChatGPT to engineer the removal of Unknown Worlds Entertainment CEO Ted Gill from the company to dodge a $250 million bonus payout."
"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."
Krafton, a South Korean gaming company, acquired Unknown Worlds Entertainment in 2021 for $500 million with a $250 million earn-out bonus contingent on Subnautica 2 sales targets. The acquisition agreement guaranteed the studio's independence and protected its leadership from removal except for cause. When internal projections indicated the bonus would be triggered, CEO Changhan Kim consulted ChatGPT instead of his legal team to devise a strategy for removing CEO Ted Gill and avoiding the payout. A Delaware Court of Chancery judge ruled that Kim improperly used AI to engineer a corporate takeover strategy, finding the dismissal unjustified and ordering the company to reverse all actions taken.
#ai-decision-making-risks #corporate-governance #legal-consequences #acquisition-disputes #chatgpt-misuse
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