Open AI Cut Off a Billion-Dollar Customer to Avoid Elon Musk | WIRED

Overview

Open AI Cut Off a Billion-Dollar Customer to Avoid Elon Musk

In a late-night blog post last Friday, Open AI said it would wind down its partnership with Cursor, the startup behind one of the most popular AI coding tools on the market. The reason Open AI gave for the decision is effectively that it can’t trust Elon Musk, whose company Space X recently acquired Cursor in a $60 billion deal.

Details

In doing so, Open AI walked away from one of its most important customers. Cursor has long paid Open AI fees to offer the Chat GPT-maker’s models to developers using its AI coding editor. At the start of 2026, Cursor was one of Open AI’s top five customers in terms of revenue, people familiar with the matter tell WIRED. By the spring of this year, Open AI estimated Cursor would bring in more than $1 billion in annualized revenue for the Chat GPT maker, based on the partnership’s performance at that time, the people said.

The figures, which have not been previously reported, indicate the financial loss Open AI is willing to take on to avoid doing business with Musk. Open AI declined to comment. Representatives for Space X and Cursor did not immediately respond to WIRED's request for comment.

As Open AI prepares to go public next year, it’s trying to show investors a more stable business—ideally one that doesn’t rely so heavily on the goodwill of Musk. Open AI reportedly now generates more than $40 billion in annualized revenue, drawing on several different lines of business, including subscriptions, ads in Chat GPT, and selling access to its AI coding tool, Codex.

Losing a major customer like Cursor may not hurt Open AI financially as much as it once would have, but it was certainly a difficult decision. The company acknowledged in its blog post that ending the partnership may damage its standing with developers—a community it has spent years carefully working to win over—by cutting off a major channel they use to access Open AI’s models.

Michael Truell, Cursor’s founder and CEO, who is now leading teams at Space X, responded publicly to Open AI’s announcement hours later on Friday in a post on X, claiming that the Chat GPT-maker’s models only “serve about 5% of Cursor user traffic.” The comment seemed designed to imply that Open AI’s models weren’t very popular with developers using Cursor, and wouldn’t meaningfully affect its business.

Open AI’s head of core products, Thibault Sottiaux, was quick to point out that token usage is “not a proxy for revenue nor value created,” and asked Truell to “share the math” behind the 5 percent number.

WIRED previously reported that Cursor leaders hoped to remain a platform for third-party AI models from Open AI and Anthropic, even after the Space X acquisition. Some AI insiders considered that wishful thinking, assuming that Cursor and Open AI’s breakup has long been a foregone conclusion. As Open AI builds Codex into a large AI coding business, it increasingly finds itself competing with Cursor for customers. Nevertheless, the companies have operated relatively peacefully, as partners and competitors, for well over a year.

Evidently, that arrangement was no longer possible with Musk in control of Cursor. Open AI may have determined that its Cursor partnership was not worth the risk that Space X might distill its best AI models. The company noted in its blog post that, earlier this year, Musk seemingly said that x AI—now a part of Space X—used Open AI’s models to train its own. The apparent admission came during Musk’s deposition in his lawsuit against Open AI, in which he claimed that Sam Altman and Greg Brockman had stolen a charity they created together roughly a decade ago. A federal jury dismissed the suit earlier this year.

Open AI and Cursor have a long, complicated history of their own. Open AI’s startup fund was one of the first investors in Cursor, participating in its 2023 seed round. At the time, the idea that a young startup could compete with Microsoft’s popular AI coding tool, Git Hub Copilot, seemed like a pipe dream. But in the years since, Cursor’s popularity with developers became undeniable.

WIRED previously reported that Open AI approached Cursor about an acquisition at one point, though the talks never reached an advanced stage. By the summer of 2025, Truell appeared prominently in Open AI’s marketing materials for the launch of its long awaited GPT-5 AI model.

Cursor isn’t done with third-party AI models just yet. In the wake of Open AI’s announcement, Anthropic cofounder Tom Brown said his company would continue to make Claude models available in Cursor. I’m not sure that’s out of the goodness of their heart—Anthropic may have to play nice with Cursor because it depends on Musk’s Space X for $45 billion of data center capacity. Last year, Anthropic had no problem cutting off the AI coding startup called Windsurf when Open AI was rumored to be acquiring it. (Windsurf was ultimately bought by another startup, Cognition.) At the time, Anthropic cofounder Jared Kaplan told me, “It would be odd for us to sell Claude to Open AI.”

I guess it’s fine to sell Claude to Space X, though?

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Key Takeaways

Open AI Cut Off a Billion-Dollar Customer to Avoid Elon Musk
In a late-night blog post last Friday, Open AI said it would wind down its partnership with Cursor, the startup behind one of the most popular AI coding tools on the market
In doing so, Open AI walked away from one of its most important customers
The figures, which have not been previously reported, indicate the financial loss Open AI is willing to take on to avoid doing business with Musk
As Open AI prepares to go public next year, it’s trying to show investors a more stable business—ideally one that doesn’t rely so heavily on the goodwill of Musk