The PearAI controversy emerged in 2024 when PearAI, an AI-powered code editor startup backed by Y Combinator, was accused of copying existing open-source projects such as Visual Studio Code (VSCode) and Continue.dev. The uproar began when PearAI launched its product under a proprietary "Pear Enterprise License," sparking criticism from the tech community, which expected an open-source offering. To make matters worse, the company's founder, Duke Pan, admitted that the license had been generated using ChatGPT, raising concerns about the company's transparency and professionalism.
Many users quickly noticed that PearAI was almost identical to Continue.dev, with some accusing the startup of simply renaming components rather than building anything new. This prompted allegations that PearAI was rebranding existing work without giving proper credit, despite Pan's claims that PearAI's GitHub had openly stated it was a fork of VSCode and Continue. Even though Pan later apologized and re-licensed the project under the Apache open-source license, the damage was done. Critics argued that the move seemed like a reaction to public pressure rather than a genuine commitment to open-source principles.
The controversy also raised broader concerns about venture capital practices. Y Combinator, known for supporting innovative tech startups, was criticized for funding PearAI despite its lack of originality. Some saw this as an example of VCs funding projects based more on the "AI" label than actual technological advancement. This led to discussions about the ethical responsibilities of both startups and investors, particularly in relation to intellectual property and the open-source ecosystem​