Cursor Loses OpenAI Support as SpaceX's $60 Billion Acquisition Reshapes AI Alliance

OpenAI announced on Friday (28th) that it plans to terminate its cooperation agreement with Cursor to provide AI models, stating it does not have confidence that SpaceX will use the technology within OpenAI's terms of service. Cursor has now become part of SpaceX under Elon Musk, intensifying competition between the two AI camps.

OpenAI stated it "does not have confidence that SpaceX will operate within our terms of service" when using its technology, prompting the decision to end the existing partnership. However, OpenAI did not elaborate on specific usage concerns or disclose a precise timeline for the termination. SpaceX had not responded to inquiries at the time of reporting.

The timing of this partnership shift is particularly sensitive. SpaceX announced in June a $60 billion all-stock deal to acquire Anysphere, Cursor's parent company, with the transaction expected to close in Q3. Cursor officially confirmed the acquisition's completion on August 14, becoming a subsidiary of SpaceX.

SpaceX initially announced a collaboration with Cursor in April, planning to jointly develop a new generation of "coding and knowledge work AI," while securing an option to acquire Cursor for $60 billion in the future. SpaceX aimed to leverage Cursor's AI coding tools and engineering talent to strengthen its own AI strategy.

Cursor is a rapidly rising AI-powered coding tool whose core product uses large language models to assist developers in writing, modifying, and testing code. In August, Cursor officially announced the completion of the acquisition, marking its transition from an independent tool capable of integrating multiple AI models to a component of SpaceX's AI ecosystem.

This change in ownership has complicated Cursor's prior model partnership with OpenAI. OpenAI's decision to terminate the agreement means Cursor may need to shift its model supply sources or rely more heavily on SpaceX's in-house AI technology.

Meanwhile, SpaceX's acquisition of Cursor represents a major step in Elon Musk's broader AI ambitions. The $60 billion deal is one of SpaceX's largest acquisitions to date, giving the company access to a mature AI coding product and skilled talent, positioning it to challenge OpenAI and Anthropic in the developer AI tools market.

Cursor's strategic role under SpaceX is also evolving. Previously integrating multiple AI models, Cursor is now expected to deepen integration with Musk's AI ecosystem, including Grok and SpaceX's AI computing infrastructure.

OpenAI's decision comes amid growing industry focus on AI model security, usage policies, and risks from AI agents. Reuters recently reported that Russian-speaking hackers exploited Cursor earlier this year to breach at least seven companies, using AI agents to accelerate credential theft and vulnerability exploitation. This incident highlights emerging risks in AI coding tools related to security and access control.

Over 100 tech and financial firms, including OpenAI, Microsoft (MSFT-US), Alphabet (GOOGL-US), Amazon (AMZN-US), and IBM (IBM-US), have jointly urged governments and enterprises to strengthen defenses against AI-driven cyberattacks and establish stricter access controls for trusted AI models.

For OpenAI, ending the partnership reflects shifting dynamics between AI model providers and application-layer companies. While AI apps once freely integrated models from OpenAI, Anthropic, and Google, acquisitions by major tech firms may turn collaborators into direct competitors.

OpenAI has not yet disclosed implementation details post-termination, and SpaceX has not issued a public response. With Cursor now formally integrated into SpaceX, this shift in model supply could signal escalating rivalry between OpenAI and Musk's AI ambitions.