Last Friday, OpenAI announced it would end its partnership with Cursor, the startup behind a leading AI coding tool. The decision stems from a lack of trust in Elon Musk, whose company SpaceX recently acquired Cursor in a deal valued at $60 billion.
OpenAI has walked away from one of its most important revenue streams. For years, Cursor paid fees to run ChatGPT models within its editor. At the start of 2026, the startup was among OpenAI’s top five clients by revenue. By spring this year, OpenAI estimated the partnership generated more than $1 billion in annualised revenue. People familiar with the matter told WIRED that the figures, which had not been reported before, show the financial loss OpenAI is willing to accept to avoid doing business with Musk.
OpenAI declined to comment further. Representatives for SpaceX and Cursor did not immediately respond to requests.
“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,” OpenAI wrote in its blog post.
As OpenAI prepares to go public next year, it aims to present a stable business to investors, ideally one that does not rely heavily on Musk’s goodwill. The company reportedly now generates more than $40 billion in annualised revenue across subscriptions, ads in ChatGPT, and access to its AI coding tool, Codex.
Losing a major customer like Cursor may not hurt OpenAI’s finances as much as it once would have, but it was a difficult call. The company acknowledged that ending the partnership could damage its standing with developers by cutting off a major channel they use to access its models.
Michael Truell, Cursor’s founder and CEO, who now leads teams at SpaceX, responded publicly on X hours later. He claimed OpenAI’s models “serve about 5% of Cursor user traffic.” The comment seemed designed to imply the models were not popular with developers using Cursor and would not meaningfully affect its business.
Thibault Sottiaux, OpenAI’s head of core products, quickly pointed out that token usage is “not a proxy for revenue nor value created.” He asked Truell to “share the math” behind the 5 percent figure.
WIRED previously reported that Cursor leaders hoped to remain a platform for third-party AI models from OpenAI and Anthropic even after the SpaceX acquisition. Some AI insiders considered that wishful thinking, assuming the breakup had long been a foregone conclusion. As OpenAI builds Codex into a large AI coding business, it increasingly finds itself competing with Cursor for customers. Nevertheless, the companies operated relatively peacefully as partners and competitors for well over a year.
Evidently, that arrangement was no longer possible with Musk in control. OpenAI may have determined the partnership was not worth the risk that SpaceX might distil its best AI models. The company noted in its blog post that earlier this year Musk seemingly said xAI—now part of SpaceX—used OpenAI’s models to train its own. The apparent admission came during Musk’s deposition in his lawsuit against OpenAI, in which he claimed 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.
OpenAI and Cursor have a long, complicated history. OpenAI’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 GitHub Copilot seemed like a pipe dream. But in the years since, Cursor’s popularity with developers became undeniable.
WIRED previously reported that OpenAI 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 OpenAI’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 OpenAI’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 SpaceX for $45 billion of data center capacity. Last year, Anthropic had no problem cutting off the AI coding startup called Windsurf when OpenAI 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 OpenAI.”
I guess it’s fine to sell Claude to SpaceX, though?
What it means
Developers lose a reliable way to access top-tier models without negotiating directly with providers. The market is now more fractured, forcing teams to choose between specific vendors or risk losing access entirely. This shift adds friction to the workflow of building software with AI assistance.
