South Korean company following ChatGPT management advice forced to backtrack by court — Krafton improperly ousted Subnautica developer bosses to dodge $250m bonus payout
South Korean game company disagrees with the ruling about its management of the US-based Subnautica developer.
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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Mark Tyson is a news editor at Tom's Hardware. He enjoys covering the full breadth of PC tech; from business and semiconductor design to products approaching the edge of reason.
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thesyndrome At this point I'm struggling to think of a single CEO who isn't trying to cheat their way to ludicrous profits at the expense of literally everyone else who they work with.Reply
Like, it just blows my mind how multi-millionaires are the people LEAST likely to pay for something, maybe this is the kind of tactics they used to get to where they are, but it feels like even once they have a fancy house, fancy car, and more money than you know what to do with, they STILL try to cheat people despite the need for that having long since disappeared from their lives.
Greed is a hell of a thing. -
markishome359 Replyit looks like the Krafton CEO ... sought to use ChatGPT with what you might describe as malignant intent.
I think you mean "malign" or "malicious" intent -
DS426 ReplyKrafton disagrees with the ruling and is looking at its options
Krafton should find a new CEO. Do they really want someone that lacks basic business executive integrity and is willing to rely on AI to break existing contracts, promises, and obligations with persons that haven't done anything wrong on their part?
Liars. Don't commit to a $250m bonus and then not follow through. Krafton shouldn't be defending these scummy actions, so it tells me most of upper-management is toxic.
IMO, Unknown Worlds Entertainment should split off, arguing the terms of the acquisition were breached. This isn't an owner that those folks should be working for. Obviously UWE isn't going to be treated independently as claimed. -
thrus Reply
If they did at best keafton would say. Ok you take what you brought to the table and leave we will take what we brought and leave. Please cut us a check for the 500 million we invested, and this meeting can end right nowDS426 said:Krafton should find a new CEO. Do they really want someone that lacks basic business executive integrity and is willing to rely on AI to break existing contracts, promises, and obligations with persons that haven't done anything wrong on their part?
Liars. Don't commit to a $250m bonus and then not follow through. Krafton shouldn't be defending these scummy actions, so it tells me most of upper-management is toxic.
IMO, Unknown Worlds Entertainment should split off, arguing the terms of the acquisition were breached. This isn't an owner that those folks should be working for. Obviously UWE isn't going to be treated independently as claimed. -
King_V Reply
Malignant is a synonym of malicious.markishome359 said:I think you mean "malign" or "malicious" intent -
hotaru251 Reply
...yes.DS426 said:Do they really want someone that lacks basic business executive integrity and is willing to rely on AI to break existing contracts, promises, and obligations with persons that haven't done anything wrong on their part?
CEO's who try to maximize company profit are exactly what the investors want.
They dont want to know you doing shady stuff but they 100% support you doing it w/o them knowing if it makes em more $.
Krafton is going to make the ceo & the other 2 (if return) jobs hell until it can find a way to properly get rid of em as they shamed the company publically and asian corpo hates that more than anything.