A US court has ordered South Korean games company Krafton to reinstate the leadership of one of its own studios after it removed them in an attempt to avoid paying a large bonus.
The problem started 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 deal, Krafton promised to pay an additional $250 million if the sequel, Subnautica 2, reached certain sales targets.
The deal also allowed the studio to operate independently and its leaders to remain in charge unless there was a valid reason to remove them.
Concerns about paying out bonuses
As the sequel neared release, internal forecasts indicated that the bonus conditions would likely be met.
According to a Fortune report, Krafton’s CEO, Changhan Kim, believed the deal was disadvantageous and felt the company made a bad deal. His legal team warned that removing studio management would not cancel the bonus payment and could lead to legal problems.
The AI Council and the “Project X” plan.
Despite the warning, Kim turned to ChatGPT for advice. According to the court’s findings, AI initially said it would be difficult to avoid paying the bonus.
“Fearing that he had agreed to a ‘shift’ contract, KRAFTON’s CEO consulted an artificial intelligence chatbot to create a strategy to ‘take over’ the company,” Delaware Vice Chancellor Lori Will wrote in the decision.
However, it was later proposed to create an internal strategy known as “Project X” to renegotiate the deal or take control of the studio.
- Gaining control over publishing rights on platforms such as Steam
- Taking control of the game code
- Present the problem as a game quality and player trust issue
- Preparation of legal arguments and public reports
- Willingness and management removal
The plan raised concerns in the gaming community and raised doubts about the stability of the studio.
Soon after, key leaders—including the co-founders and CEO—were removed from their positions.
Court decision
The court criticized Krafton’s actions, saying that company leaders must make independent decisions rather than relying on artificial intelligence to make major business decisions. He ruled that the transfers were unauthorized.
Leaders restored, timeline extended
According to the ruling, Gill was reinstated as CEO and given the power to reinstate the co-founders. The earning period has also been extended to compensate for the disruption caused.
Krafton answers
Krafton said he disagrees with the court’s decision and is considering his next steps. The company added that it remains focused on delivering the best possible version of Subnautica 2 and is working hard to launch it on time.
