Conversations with AI Detailed in Court Ruling... Not Protected by ACP

Published 22 Apr.2026 16:10(KST)

Global game developer Krafton, known for titles such as "PUBG: Battlegrounds," was found to have questioned a generative artificial intelligence (AI) tool about its response strategy and implemented its suggestions in the process of dismissing key executives at its subsidiary. This was revealed in detail in the decision of a U.S. court. Despite internal warnings against the dismissal, the CEO pushed ahead with the decision, and the conversation between the CEO and the AI was admitted as evidence against Krafton, leading to its defeat in court—this is the key point of the case.

The case originated from an acquisition agreement in 2021. Krafton acquired Unknown Worlds, the developer of the game "Subnautica," for $500 million, and designed an earn-out structure that would pay up to an additional $250 million depending on performance. In return, Krafton guaranteed operational control to the founders and Edward Gill, CEO of Unknown Worlds, and stipulated that dismissal would be permitted only for just cause.

The issue arose as the release of the new "Subnautica 2" approached. According to the court decision, internal financial forecasts projected that, if the game was released as scheduled, the earn-out payment would reach approximately $190 million to $240 million. Krafton judged that this amount could exceed the enterprise value generated by Unknown Worlds.

The ruling also describes how Krafton CEO Changhan Kim reviewed internal opinions while considering response options. Maria Park, Head of Corporate Development at Krafton, warned Kim via internal messenger that “Even if you dismiss for just cause, the obligation to pay the earn-out does not disappear, and the company could be exposed to lawsuit and reputation risk.”

In response, CEO Kim asked ChatGPT about possible courses of action, assuming negotiations had broken down. ChatGPT initially replied with the general statement that an earn-out would be “difficult to cancel.” However, the court document states that Kim continued to consult ChatGPT, which eventually suggested dismissal strategies and execution scenarios. Based on this, Kim formed the "Project X" task force.

According to the decision, ChatGPT proposed: △ seizing public opinion by emphasizing fan trust and quality; △ delaying the release by restricting publishing and development access on platforms such as Steam; △ preparing materials for contract interpretation and communication records for litigation preparation; △ strategies for retaining or replacing key personnel; and △ a "two-track" response combining legal and financial measures.

Actual measures followed. Krafton restricted publishing rights on Steam, a game distribution platform. The court found that, as a result, Unknown Worlds was effectively unable to release "Subnautica 2" independently. Subsequently, key executives including CEO Gill were dismissed, with the stated reason that management had attempted to rush the game's release.

After the lawsuit was filed, additional reasons for dismissal were presented. However, the court did not accept them, ruling that changes in the founders' roles were already known to the company and that securing documents could be seen as a response to the dispute. The court nullified the dismissals, ordered the restoration of management rights, and reinstated Gill. The earn-out deadline was also extended by 258 days.

This ruling did not specifically determine whether conversations with generative AI are protected by attorney-client privilege (ACP). However, it suggests that AI responses do not fall under ACP protection since AI is not a human lawyer.

Legal experts in the United States also analyze that it is difficult for conversations with AI or documents generated by AI to be protected by ACP unless they are formed through a lawyer. For example, in February, the U.S. District Court for the Southern District of New York ruled in the "Bradley Hefner" case that documents created by the defendant using the generative AI "Claude" were not protected by ACP or attorney work-product privilege, reasoning that materials prepared without the supervision of a lawyer could not be regarded as the result of legal counsel.

In a post on their website, lawyers from the global law firm Sidley Austin wrote, “The ruling details repeated interactions between Krafton, as the acquiring party, and ChatGPT as it sought ways to avoid the earn-out and secure management rights,” adding, “Because the AI-generated advice in this process was not legal counsel provided by a lawyer, it was not protected by ACP and ultimately could be used as evidence against Krafton in litigation.”