OpenAI announced Friday, August 28, that it plans to end its partnership providing AI models to Cursor, the popular AI coding tool, following its acquisition by Elon Musk's SpaceX — the latest escalation in the long-running, bitter rivalry between OpenAI CEO Sam Altman and Musk.

What OpenAI Announced

"We're ending our partnership with Cursor following its acquisition by SpaceX," OpenAI wrote on X. "Under our proposal, Cursor's direct access to our models would end on November 12." In a longer blog post, OpenAI said it was giving the maximum notice allowed under its contract, explaining: "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."

The Backstory: SpaceX's $60 Billion Deal for Cursor

SpaceX announced an all-stock deal in June to acquire Anysphere, the startup behind Cursor, for roughly $60 billion, completing the acquisition earlier this month. Cursor had been one of the fastest-growing names in the AI coding assistant space, and OpenAI's own venture arm, the OpenAI Startup Fund, had been an early investor in the company since its 2023 seed round — notably, OpenAI had also approached Anysphere about a potential acquisition of its own on two separate occasions, in 2024 and earlier this year, though those talks never advanced.

Why OpenAI Says It Can't Trust SpaceX

OpenAI's stated rationale centers on a pattern of alleged past contract violations by companies under Musk's control. The company said that after Musk acquired Twitter (now X, and now part of SpaceX), that platform broke the terms of its OpenAI contract, "alongside many others." OpenAI also said xAI, Musk's AI company that has since merged into SpaceX, had itself admitted under oath to violating OpenAI's terms of service — terms OpenAI describes as similar to xAI's own usage policies. "To work with a large partner like SpaceX, we typically rely on custom contracts to ensure compliance with our terms of service and that the integration provides for safety at scale," OpenAI wrote.

An Added Layer: OpenAI's Upcoming Model

OpenAI also cited a forward-looking concern tied to its next model release, saying that "as AI capabilities advance, we also have a new level of accountability to ensure our upcoming model, Astra, is being used in accordance with our terms" — suggesting the decision isn't purely about past conduct, but also about controlling how its most advanced future technology gets deployed through a company now controlled by a direct competitor and rival.

Cursor's Response

Michael Truell, Cursor co-founder and now a SpaceX executive following the acquisition, pushed back on the decision in his own X post: "Cursor was one of the very first users of OpenAI, we've worked closely with their team for years, and we've trusted their platform to be neutral infrastructure for our business." Truell said the two teams were actively speaking to try to resolve the issue, and noted that OpenAI models currently account for roughly 5% of Cursor's overall traffic — a relatively modest share that may cushion the practical impact of the cutoff on Cursor's day-to-day operations, even if it remains symbolically significant.

What Cursor Offers Instead

Cursor has increasingly diversified its underlying model offerings beyond OpenAI. The platform offers Grok models developed by SpaceX-owned xAI among its first-party model options, while also giving users access to frontier models from other providers — a structure that means the loss of direct OpenAI access, while notable, doesn't leave Cursor without alternative model options for its developer user base.

The Deeper Rivalry Behind the Decision

Friday's move unfolds against the backdrop of a long, increasingly public feud between Altman and Musk. Musk — who co-founded OpenAI before departing and later launching the rival xAI — has filed a $150 billion lawsuit against Altman, alleging OpenAI betrayed its original nonprofit mission by transitioning toward a more commercially driven structure. The Cursor decision adds a fresh, concrete business consequence to that ongoing legal and rhetorical battle, effectively pulling Cursor — a previously neutral, widely used developer tool — into the crossfire between the two companies.

What This Means for Developers

OpenAI has stressed it is trying to minimize disruption for the developer community that relies on Cursor, writing: "We know that the people most affected by this decision are the developers who rely on OpenAI models in Cursor. We care about their experience in this transition and we're ready to go above and beyond to support them." With a November 12 shutoff date and roughly 5% of Cursor's traffic affected, most Cursor users are expected to be able to shift to the platform's other available models with minimal friction.

What's Next

With OpenAI having given the maximum contractual notice period and Cursor's team signaling openness to further discussions, it remains to be seen whether the two sides find a resolution before the November deadline, or whether this becomes a permanent, symbolic marker of the deepening divide between two of AI's most influential companies. For OpenAI's full statement, see the official OpenAI blog post.