OpenAI announced last Friday that it will terminate model access for Cursor, the AI coding tool that SpaceX acquired for $60 billion earlier this month. The decision is the latest exchange in a rivalry between Sam Altman and Elon Musk that has expanded from courtroom litigation into the mechanics of who may build on whose models.
Fully subsumed
SpaceX closed its acquisition of xAI on February 2, merging the rocket and satellite company with Musk’s artificial intelligence startup at a combined valuation of $1.25 trillion. The transaction, the largest corporate merger on record by deal value, absorbed Grok’s language models, xAI’s Colossus supercomputer, and the X social media platform into a corporate structure that already included Starlink’s global satellite network. Musk framed the merger as a path toward space-based data centers, but its nearer-term effect was to concentrate models, compute, data, and distribution under a single owner.
SpaceX went public on the Nasdaq in June and announced a $60 billion agreement to acquire Cursor the same week. The acquisition closed on August 14 as the largest startup exit on record, with Cursor’s annualized revenue having grown from $1 billion to roughly $4 billion in the preceding year. SpaceX financed the deal entirely in stock, representing roughly three percent dilution at its IPO valuation.
Cursor operates as a wholly owned subsidiary under a new SpaceXAI division, with its engineers accessing SpaceX’s Colossus compute cluster and working on Grok-branded products. Morgan Stanley projected that Cursor alone could contribute $13 billion to SpaceX’s revenue by 2027.
Pulling the plug
OpenAI announced that it will wind down its Cursor contract, with a proposed shutoff date of November 12, two weeks after SpaceX closed the acquisition. Musk co-founded OpenAI before departing in 2018, and his lawsuit against the company over its for-profit conversion remains active in federal court. The contract termination uses the maximum notice period the agreement allowed and withholds access to future models, including OpenAI’s forthcoming Astra system.
OpenAI said that it could not be confident that SpaceX would honor its terms of service, citing a pattern of contract violations by Musk’s companies that includes Musk’s own courtroom acknowledgment that xAI used OpenAI’s models to generate training data. Musk called that practice an industry standard. OpenAI described the decision as difficult but said that its standard of accountability had increased with the development of more powerful frontier systems.
Cursor CEO Michael Truell responded by noting that OpenAI models serve roughly five percent of Cursor’s user traffic and that the two companies were in discussions. Individual developers will retain the ability to use their own OpenAI API keys inside Cursor, but the platform will lose its bundled integration. Anthropic pledged the same day to increase its compute allocation for Claude in Cursor.
Staking claims
Anthropic restricted the coding tool Windsurf’s Claude access in June 2025 amid reports that OpenAI was considering an acquisition of the company. Two months later, Anthropic revoked OpenAI’s own API access after discovering that OpenAI employees had used Claude for internal benchmarking ahead of a major model launch. Anthropic’s commercial terms explicitly prohibit customers from using its models to build competing AI systems, and the company enforced that prohibition in each case.