OpenAI walks away from Cursor deal worth $1 billion a year

OpenAI is ending its partnership with Cursor, the company behind one of the most widely used AI coding tools, months after SpaceX bought Cursor in a $60 billion deal. In a blog post published late Friday, OpenAI said it no longer trusts Elon Musk’s companies to follow its usage terms, citing past contract violations, and will wind down the deal that let Cursor offer OpenAI’s models to developers.

The decision carries a real cost. Cursor was one of OpenAI’s top five customers by revenue at the start of 2026, and by this spring OpenAI estimated the partnership would generate more than $1 billion in annualized revenue, according to people familiar with the matter cited by Wired. OpenAI has not previously disclosed those figures. In its post, the company wrote: “We are making this choice because we cannot be confident that SpaceX will use our technology within our terms of service, based on our experience with Elon Musk’s companies violating contracts.”

Cursor’s founder and now SpaceX executive, Michael Truell, pushed back within hours on X, saying OpenAI’s models handle only about 5% of Cursor’s user traffic. OpenAI’s head of core products, Thibault Sottiaux, replied that token usage is “not a proxy for revenue nor value created” and asked Truell to explain how he calculated the figure.

A calculated trade-off before an IPO

OpenAI is preparing to go public next year and reportedly generates more than $40 billion in annualized revenue across subscriptions, advertising in ChatGPT, and its own coding tool, Codex. Diversified revenue makes the loss of Cursor easier to absorb than it might once have been, but OpenAI acknowledged in its post that the split could hurt its standing with developers, a group it has spent years courting. OpenAI also pointed to Musk’s deposition in his lawsuit against Sam Altman and Greg Brockman, in which he appeared to say that xAI, now part of SpaceX, used OpenAI’s models to train its own systems. A federal jury dismissed that lawsuit earlier this year.

OpenAI and Cursor have a long history. OpenAI’s startup fund backed Cursor’s 2023 seed round, and OpenAI reportedly explored acquiring the company at one point, though talks never advanced. Truell later featured in OpenAI’s marketing for the GPT-5 launch in the summer of 2025. As OpenAI built Codex into a competing product, the two companies kept working together anyway, until Musk’s acquisition of Cursor made that arrangement untenable.

Cursor is not without alternatives. Anthropic cofounder Tom Brown said his company will keep offering Claude models inside Cursor. Anthropic previously cut off the coding startup Windsurf when OpenAI was rumored to be acquiring it in 2025; Anthropic also relies on SpaceX for $45 billion in data center capacity, a dependency that may shape how long its Cursor relationship lasts. Whether OpenAI’s models return to Cursor, or whether SpaceX pushes Cursor toward its own AI systems, depends on decisions neither company has made public yet.