OpenAI Cuts Cursor Loose as Altman-Musk Feud Escalates

Sam Altman and Elon Musk have been at odds with one another since their time at OpenAI, and this week provided the latest evidence of their conflict. The deal that saw SpaceX Musk’s company acquire $60 billion worth of Cursor’s parent company, Anysphere, earlier this month, is why OpenAI decided to end its relationship with the hugely popular AI coding tool. 

It is scheduled to close on November 12, but while OpenAI is suggesting that the closure is a matter of contract, the timing and the wording doesn’t look like a contract problem but personal (Reuters).

What OpenAI Actually Said

In a blog post and a follow-up on X, OpenAI didn’t mince words. The company said they “can’t be sure SpaceX will utilize our tech in our terms of service, especially after watching Elon Musk’s business partners breach their agreements”.

This is a reference to X (formerly Twitter) that OpenAI noted previously violated its own terms when it was acquired by Musk. OpenAI’s message is: we’ve been duped by a Musk company once, and we’re not doing it again.

The firm also announced it would suspend access to new vehicles, such as one it’s calling Astra, which is not just about dialling back access to the current models but a complete ban on future collaboration as well.

Cursor co-founder Michael Truell, now an executive at SpaceX after the acquisition, commented on X, calling the decision disappointing considering the history of the two companies. He noted that Cursor had been one of OpenAI’s first customers and had developed a longstanding relationship with OpenAI as a neutral infrastructure for its business. 

Truell also said that the models from OpenAI make up approximately 5% of Cursor’s traffic, meaning the impact on the product might be less significant than its competitors as the company uses a number of model providers, such as xAI’s Grok which Musk launched with his own AI firm.

However, in this case, it is optics that count. It’s not a very respectable sight for a company that has been established partially due to its association with the industry’s best model providers to be deleted from the list by one of those providers, even if the traffic percentage is high.

This Is About More Than a Contract

There’s a broader, more complicated relationship between Altman and Musk that has long been adversarial and that’s the only way to fully grasp the reasons for OpenAI’s haste. 

Musk co-founded OpenAI with Altman when the company was still a not-for-profit, but left following disagreements regarding the direction the company should take. He’s been criticizing the company’s move towards a for-profit model and its relationship with Microsoft ever since. 

Most notably, the suit by Musk had been against Altman and OpenAI, claiming that the company had traded its original nonprofit mission for commercial interests, and seeking a $150 billion damages amount.

Given the backdrop, it was always going to be a weird partnership for a company owned by SpaceX to suddenly need OpenAI’s models to work. The move doesn’t seem like a stretch to view as OpenAI opting not to give a strategic toe-hold to a competitor which they are suing and which is suing them.

The Bigger Industry Pattern

Finally, there’s an interesting structural tension to note: the foundation models are being increasingly used to create coding tools by the very companies that built them, including OpenAI, Anthropic, Google, and others, which will inevitably make them a competition for Cursor and other tools that depend on their models to function. 

In this kind of situation, where you are also the competitor, a decision such as this is less of a business logic and more of a leverage. As the AI coding space heats up, OpenAI’s bid to eliminate a SpaceX-backed competitor is a message to developers on the need for model access to be more selective.

What Happens Next

For the time being, until November 12, Cursor will have until then before OpenAI’s models leave the platform. With the company’s current multi-model environment, customers won’t see a dramatic change in their daily operations. 

The interesting part of the story, however, is not so much about coding tools as it is two of the most powerful tech players using their respective companies as the arena for their own personal feuds, which seem to show no sign of abating.

TheTweaks Verdict: This isn’t just another business decision, it’s a proxy war between Altman and Musk and Cursor users are in the middle of it. In the future, there will likely be even more confrontations such as these as AI firms battle each other with their own models.