OpenAI announced it will terminate its contract with AI coding startup Cursor on November 12, 2026, following Cursor's $60 billion acquisition by SpaceX. OpenAI cited a lack of trust in Elon Musk-owned companies, pointing to past contract violations by Twitter and xAI. The move escalates the bitter feud between Sam Altman and Musk, who recently lost a $150 billion lawsuit against OpenAI. Cursor is currently in talks with OpenAI to resolve the issue while continuing to offer alternative models.
OpenAI termination of Cursor contract
- ▪Michael Truell, a co-founder of Cursor and executive at SpaceX, stated on August 28, 2026, that they were speaking with the OpenAI team to resolve the contract termination issue
- ▪OpenAI stated that its partnership agreement with Cursor provided a limited time window to cancel the contract following a change of control
- ▪OpenAI announced on August 28, 2026, that it plans to terminate its contract with Cursor, a coding startup recently acquired by SpaceX, and shut off its access to OpenAI models on November 12, 2026
SpaceX acquisition of Cursor
- ▪The acquisition of Cursor by SpaceX provides the coding startup with access to SpaceX's computing power
- ▪SpaceX completed its acquisition of Anysphere, the startup behind Cursor, in August 2026 for $60 billion in an all-stock deal
Musk company contract violations
- ▪OpenAI alleged that Twitter, which Elon Musk acquired in 2022 and merged with SpaceX in February 2026, previously violated its contract by cutting off OpenAI's access to Twitter's data
- ▪OpenAI stated that Elon Musk testified under oath in 2026 that xAI had partially violated OpenAI's terms by training its Grok model using OpenAI's outputs
- ▪OpenAI justified ending the Cursor contract by stating it lacks confidence that SpaceX will comply with its terms of service, citing past contract violations by Elon Musk-owned companies
OpenAI-Musk legal feud
- ▪Elon Musk previously sued OpenAI, its CEO Sam Altman, and others for $150 billion, accusing them of betraying the company's original nonprofit mission for self-enrichment
- ▪A federal jury ruled against Elon Musk in his lawsuit against OpenAI, finding that he missed the statute of limitations, though Musk plans to appeal the decision
Cursor alternative model providers
- ▪OpenAI stated that it will not provide future models, including its upcoming Astra model, to Cursor
- ▪Cursor's software allows users to access alternative AI models from Anthropic, Google, and SpaceXAI, including Grok models developed with SpaceXAI
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