xAI Cursor: Death Knell
The xAI option on Cursor is a death knell. Cursor’s value is in the model optionality it provides. Users always have access to the most recent foundational model. It had the initial lead because it was a familiar IDE that allowed gradual adoption of AI features. That is no longer a desired trait. Harnesses are converging to the minimal set of features. (IMO models will self-construct a harness based on the task at hand in the future)
Anthropic and OpenAI will not allow xAI to introspect their model use in Cursor. If xAI exercises the buy option, it will have full access to those logs. Just as OpenClaw, OpenCode, and other systems were cut off by Anthopic, Cursor will be cut off as well. OpenAI hasn’t locked out existing tools because they are not foundational labs that compete, but rather mostly open-source systems or companies focused on model use.
If xAI doesn’t use the buy option, it could mean a few things. The size of the breakup fee means Cursor is spending heavily on training. My gut is this is similar to the OpenAI deals last year, where the bulk of the money is directed back into xAI for GPU spending. Even if the breakup fee is used and not the buy, it's not free money for Cursor to spend.
It likely means that Cursor couldn’t make a (near) foundational coding model, though. This is a negative signal to the company, months of distraction, and bears on their long-term survival. OpenAI and Anthropic are quickly iterating on alternatives to Cursor. As well as OSS options.
Start using Claude Code, OpenCode, and Codex. At least understand them. Or expect your Cursor usage will be limited to Composer and Grok models. Maybe Grok is the next foundational model for coding. The collaboration with Cursor may now pay dividends and help them jump-start. That is a singular and short-term outcome, however.
OpenCode (or a similar OSS project) will be the next iteration of the agnostic harness. With OpenAI'ss AWS Bedrock option, enterprises can hedge foundational models using it.
Congratulations to Cursor on the exit. It is well timed, and they executed well.