Sam Altman and Musk’s War Costs Cursor AI After $60B Deal

SpaceX bought Cursor on August 14, and two weeks later, OpenAI is moving to cut the AI coding tool off from its models. Access ends on November 12.

Cursor is one of the most widely used coding assistants among software developers. A $60 billion all-stock deal put it inside Elon Musk’s empire. OpenAI decided that was reason enough to leave.

Why OpenAI Walked Away

OpenAI never said Cursor did anything wrong. Rather, it used a change-of-control clause, meaning a contract term letting one side exit after the other is sold.

The reason it gave is trust, saying that it cannot be sure SpaceX will follow its rules. Specifically, they pointed to two events.

• X (Twitter), the platform Musk bought in 2022 and later folded into SpaceX, broke an earlier OpenAI contract.

• In a California courtroom on April 30, a lawyer asked Musk whether xAI had distilled OpenAI models to train Grok.

Distilling means prompting a rival model over and over to copy what it knows. Musk first said every AI company does it. Pressed again, he conceded that xAI partly had.

He was testifying in his own lawsuit against OpenAI, and a jury dismissed Musk’s case three weeks later for being filed too late.

OpenAI added one more condition. Astra, its next flagship model, will never ship through Cursor.

Cursor Says the Hit Is Small

Michael Truell, a Cursor co-founder now working for SpaceX, put the damage at roughly 5% of user traffic. Talks with OpenAI are still open.

“Cursor was one of the very first users of OpenAI, we’ve worked closely with their team for years, and we’ve trusted their platform to be neutral infrastructure for our business,” Truell expressed.

Elon Musk is likely not to negotiate. In his initial response, he said he “couldn’t care less” and called Altman and OpenAI president Greg Brockman untrustworthy.

Anthropic went the other way. Co-founder Tom Brown said it will add compute so Claude runs better inside Cursor.

“Cursor has been a trusted partner of Anthropic since Sonnet 3.5. We’ll continue to increase compute to support Claude models in Cursor and are excited for what comes next with them at SpaceX,” Brown shared in an early Saturday post.

OpenAI is not defending revenue worth 5% of one customer. It is refusing to sell to Musk at all. Developers have until November 12 to pick a new supplier, and Cursor already routes to SpaceXAI’s Grok models, Claude and Gemini.

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