South Korea’s Krafton Inc has been ordered to reinstate the leadership of a U.S. game studio that it acquired in 2021. The ruling, by a Delaware judge, says the Unknown Worlds Entertainment bosses were improperly removed by Krafton, an action not supported by cause. ChatGPT was extensively consulted by Krafton, according to Reuters, after the U.S. Subnautica 2 dev team looked certain to hit performance targets and earn a $250 million bonus from their new South Korean owners.
Post purchase pushover dissonance
We have covered numerous cases where AIs have tripped up to disastrous effect. Often, that’s been due to wrinkles in training data, hallucinations, or the underlying nature of how reinforcement learning works. Here, though, it looks like the Krafton CEO, Changhan Kim, sought to use ChatGPT with what you might describe as malignant intent. Specifically, Reuters says that “Kim feared he was caught in a 'pushover' deal and in June turned to ChatGPT to get out of it.”
Sure, $250 million is a lot at stake. Krafton bought Unknown Worlds Entertainment for $500 million up front in 2021, with the promise of an extra $250 million should the U.S. developer of the Subnautica games meet certain targets. It was also agreed that the studio would remain independent and that its leadership, co-founders Charlie Cleveland and Max McGuire , and CEO Ted Gill, would retain operational control and only be fired for cause.
To help Kim achieve his plans to sidestep the $250 million payout, ChatGPT provided step-by-step advice across several stages. It would advise actions such as the formation of an internal task force to renegotiate with the studio. After renegotiations were rejected, the founders and CEO were removed. Then the Krafton management plan centered on using a pressure and leverage strategy leaning on ‘fan trust.’ ChatGPT also advised Krafton to prepare a "systematic material for legal defense."
Human judgment needed for good faith decision making
Some of the key underlying features of this case, which weighed in the Unknown Worlds Entertainment leadership’s favor, were noted by Vice Chancellor Lori Will of the Court of Chancery. In the U.S., it is implied that company directors and officers must exercise independent human judgment, rather than pass good faith decisions and processes to artificial intelligence. However, the contractual breach where Krafton took out the two founders and the CEO without proper cause was the main issue here.
CEO Ted Gill is now back at the helm at Unknown Worlds Entertainment. He is free to reinstate co-founders Charlie Cleveland and Max McGuire. The earnout period to qualify for the $250 million sum has been extended by the judge. Krafton disagrees with the ruling and is looking at its options.
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