OpenAI walks away from $1 billion Cursor partnership after SpaceX acquisition

OpenAI just torched a partnership it estimated would generate more than $1 billion in annual revenue. The reason: Elon Musk’s SpaceX bought the company on the other end of the deal.

On August 28, OpenAI announced it would terminate its contract with Cursor, the AI-powered coding tool that has become one of the fastest-growing developer platforms in tech. The wind-down takes effect November 12, giving Cursor roughly ten weeks to fully decouple from OpenAI’s models.

A $60 billion deal triggered the breakup

SpaceX finalized its acquisition of Anysphere, Cursor’s parent company, in August through a $60 billion all-stock deal. The agreement had been reached back in June. That acquisition triggered a change-of-control clause in Cursor’s contract with OpenAI, giving Sam Altman’s company the legal grounds to walk away.

And walk away it did, despite the money involved. OpenAI recently estimated the Cursor partnership would bring in over $1 billion a year in revenue, according to WIRED. OpenAI cited trust issues stemming from past contract violations involving Musk’s other companies, specifically X (formerly Twitter) and xAI.

Cursor’s response: we’ll be fine

Cursor CEO Michael Truell struck a measured tone, noting that OpenAI’s models accounted for approximately 5% of the startup’s user traffic. That’s a relatively small slice of the pie for a company that hit over $1 billion in annual recurring revenue by late 2025, with some reports suggesting potential run rates approaching $4 billion.

Customers who still want access to OpenAI’s models can continue using their own API keys. Truell also noted that discussions with OpenAI are ongoing.

Anthropic has already moved to fill the gap. The Claude maker has pledged to increase compute support for its models within Cursor. Cursor is also expected to lean on xAI’s Grok models and its own Composer technology to round out its AI capabilities.

The Altman-Musk cold war heats up

This isn’t an isolated incident. Musk co-founded OpenAI in 2015 as a nonprofit, departed the board in 2018, and has since filed lawsuits and waged public campaigns against the company’s shift toward a for-profit model.

OpenAI’s upcoming Astra model, which was expected to be available through Cursor, will now be excluded from the platform entirely. That means millions of Cursor users will experience the next generation of AI coding assistance through Anthropic, xAI, or Cursor’s own tools, not through OpenAI.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.