"Krafton agreed the studio would remain independent and that its leadership would retain operational control and could only be fired for cause, according to the ruling by vice-chancellor Lori Will of the court of chancery in Delaware. If Unknown Worlds met certain targets, Krafton would pay the studio what is known as an earnout worth up to $250m."
"Krafton's chief executive, Changhan Kim, believed it was a bad deal and felt taken advantage of, according to the ruling. Kim was warned by his legal department that the earnout would still need to be paid even if there was a dismissal with cause of the Unknown Worlds' leadership."
"ChatGPT initially responded that the earnout would be difficult to cancel but later at ChatGPT's suggestion Kim formed an internal taskforce, dubbed Project X. The task force's mandate was to either negotiate a deal' on the earnout or execute a Take Over' of Unknown Worlds, Will stated."
Krafton acquired Unknown Worlds Entertainment for $500 million in 2021 with contractual guarantees that the studio would remain independent and its leadership could only be dismissed for cause. The acquisition included an earnout provision worth up to $250 million if the studio met specific targets. When internal projections indicated Subnautica 2 would trigger the earnout, Krafton's CEO Changhan Kim consulted ChatGPT for strategies to avoid the payment. Despite legal warnings about exposure to lawsuits and reputational damage, Kim formed Project X taskforce following ChatGPT's recommendations to either renegotiate the earnout or execute a takeover. The Delaware court ruled that Krafton's actions violated the acquisition agreement and ordered the reversal of the leadership removal.
Read at www.theguardian.com
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