{"id":552825,"date":"2026-03-20T12:56:19","date_gmt":"2026-03-20T12:56:19","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/552825\/"},"modified":"2026-03-20T12:56:19","modified_gmt":"2026-03-20T12:56:19","slug":"how-one-ceos-chatbot-could-cost-his-company-355-million","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/552825\/","title":{"rendered":"How one CEO\u2019s chatbot could cost his company $355 million"},"content":{"rendered":"

\"Nick<\/p>\n

March 20, 2026 \u2014 5:00am<\/p>\n

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Australia\u2019s most expensive barristers can charge tens of thousands of dollars a day. The solicitors who brief them earn less, but swarm cases in far greater numbers. America\u2019s legal system makes that all look cheap: their litigators can charge $US3400 an hour ($4800).<\/p>\n

ChatGPT, by contrast, is free. The pro version is a princely $300 a month.<\/p>\n

\"KraftonKrafton chief executive Kim Chang-han relied on an AI tool that led him into a legal disaster.Bloomberg via Getty Images<\/p>\n

That may be why Kim Chang-han, chief executive of a giant South Korean video game developer called Krafton, may have opted to take the AI chatbot\u2019s advice rather than turning to a human lawyer.<\/p>\n

If so, it may be one of the largest false economies in history, and one that says a lot about how AI is being used, or misused, in 2026.<\/p>\n

Kim, whose company made the massively popular game PUBG: Battlegrounds, had agreed to buy a smaller developer called Unknown Worlds in 2021. Its signature series was Subnautica, an underwater adventure game set on an alien world that its founders had created as an antidote to the saturation of guns in video games<\/a> after the Sandy Hook school shooting in 2012. The first edition of that title was acclaimed, and very popular, when it came out in 2018.<\/p>\n

\u201cIt is fantastical, fresh and frightening from surface to seabed, with a story that kept on surprising me and a cast of sea monsters that quite literally haunted my dreams,\u201d pronounced a reviewer at gaming publication IGN.<\/p>\n

So Kim had Krafton pay $US500 million ($709 million), cash, for Unknown Worlds. Its staff, including founders Charlie Cleveland and Max McGuire and chief executive Ted Gill, were entitled to another $US250 million ($355 million) if they hit revenue targets by the end of 2025. Under the contract, the trio would retain operational control of Unknown Worlds under the Krafton umbrella.<\/p>\n

\"GameGame designer Charlie Cleveland burnt out after the failure of his next game, Moonbreaker.Unknown Worlds<\/p>\n

But the relationship quickly soured. Unknown Worlds\u2019 next game, Moonbreaker, flopped. Cleveland burnt out. McGuire disliked his role in senior management and felt \u201cobsolete\u201d. He began devoting his time to understanding how Subnautica benefited players with autism.<\/p>\n

Both men took a reduced salary, but Gill stayed the course and by early 2025 a re-energised Cleveland was guiding Subnautica 2 towards a strong release. Krafton\u2019s modelling suggested the game\u2019s release would trigger a payout of up to $US242 million of the $US250 million potential bonus the South Korean company had agreed to when it bought Unknown Worlds.<\/p>\n

Related Article\"The<\/a><\/p>\n

Kim was angry. Now he felt he had signed a \u201cbad deal\u201d that rewarded greedy employees. Granting the payout would hurt his company\u2019s value, he feared, and make him look like a \u201cpushover\u201d. He tried to persuade Unknown Worlds to push back Subnautica 2\u2019s release. It declined.<\/p>\n

When a colleague in charge of liaising with Unknown Worlds warned him that simply sacking the trio would not eliminate Krafton\u2019s financial obligations, Kim went looking for advice.<\/p>\n

The chief executive turned not to his lawyers, but to his chatbot. And ChatGPT obliged. It told him to craft a messaging strategy to undermine the narrative of a smaller independent publisher being bullied by a global game developer; Krafton did just that. It told him to take control of the accounts Unknown Worlds needed to release the game; Kim complied. It told him to adopt a hardball legal strategy; Krafton\u2019s lawyers began sending abruptly worded letters.<\/p>\n

To give ChatGPT credit, that series of blows forced the Unknown Worlds trio to the negotiating table, but Kim was impatient. When negotiations stalled, one of his executives told him \u201cit might actually be easier to just do a takeover\u201d. Kim agreed. The trio were fired for allegedly trying to release the Subnautica sequel before Krafton believed it was ready. Later, it claimed it was entitled to sack them because Cleveland and McGuire had stepped down from their roles without informing Krafton and then, amid the dispute, had downloaded company data alongside Gill.<\/p>\n

This week Delaware\u2019s Court of Chancery, the pre-eminent forum for commercial disputes in the United States, decided Krafton\u2019s \u201cnewly manufactured justifications\u201d were \u201cpretextual\u201d, and wrong. Gill was reinstated, given authority to release the game, and the earn out period extended to make up for his dismissal. Gaming fans are hungry for its release.<\/p>\n

Related Article\"NSW<\/a><\/p>\n

With all the publicity the saga has generated, the Unknown Worlds team could be in line for the full $US250 million bonus.<\/p>\n

There\u2019s a superficial irony here. Fears that a new version of the AI giant Anthropic\u2019s Claude tool could automate common legal tasks led to the first wave of the sell-off in legal and technology stocks in February. Kim\u2019s case could be taken to show how badly that can go wrong. But he was using a general purpose AI tool, not one designed for legal work, and the technology has advanced quickly since early 2025. That is what spooked the market.<\/p>\n

The mantra in many law firms is that the problems with AI can be managed simply by having humans review its work<\/a>. That approach is too simple. On March 5, the Victorian Supreme Court took issue with an unnamed law firm<\/a> for submitting documents that appeared to have been written with AI. After a judge raised the issue, the law firm initially agreed to reply but then stopped responding. Its client\u2019s case was dismissed. Doubtless the lawyer in that case thought they had looked over whatever the AI drafted closely enough to render it indistinguishable from a human\u2019s work.<\/p>\n

The lawyer and Kim were both lulled into a false sense of security by a machine\u2019s confident answers. That creates a new dynamic in business that is less about spotting an error in a document. Instead, like a poker player, people in disputes will have to determine whether they are simply dealing with a fool, or a fool whose worst instincts are being buttressed by a misguided use of AI.<\/p>\n

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning<\/a>.<\/p>\n

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\"NickNick Bonyhady<\/a> is the business editor of The Sydney Morning Herald and The Age. He is a former deputy federal editor, technology editor and industrial relations reporter.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"March 20, 2026 \u2014 5:00am Save You have reached your maximum number of saved items. Remove items from…\n","protected":false},"author":2,"featured_media":552826,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[256,254,255,64,63,105],"class_list":{"0":"post-552825","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-au","12":"tag-australia","13":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/552825","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=552825"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/552825\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/552826"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=552825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=552825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=552825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}