OpenAI’s deal to acquire the viral AI coding startup Windsurf for $3 billion fell apart on Friday, in keeping with The Verge.
In a surprising twist, Google DeepMind is now hiring Windsurf CEO Varun Mohan, co-founder Douglas Chen, and a few of the startup’s prime researchers. A Google spokesperson confirmed the hiring of Windsurf’s leaders in a press release to TechCrunch.
“We’re excited to welcome some prime AI coding expertise from Windsurf’s group to Google DeepMind to advance our work in agentic coding,” mentioned Google spokesperson Chris Pappas in an electronic mail to TechCrunch.
Notably, Google is just not taking a stake in Windsurf and won’t have any management over the corporate. Nonetheless, as a part of the deal, Google could have a nonexclusive license to sure Windsurf know-how, although the AI coding startup stays free to license its know-how to others.
The deal represents the AI ecosystem’s hindi cinema reverse-acquihire, by which an organization hires a startup’s prime expertise and licenses its know-how however doesn’t outright purchase the corporate. Google beforehand carried out an analogous deal to hire back Character.AI CEO Noam Shazeer, as did Microsoft to rent Mustafa Suleyman. These offers have helped a number of huge tech corporations enhance their place within the AI race with out drawing regulatory scrutiny.
“We’re excited to be becoming a member of Google DeepMind together with a few of the Windsurf group,” mentioned Mohan and Chen in a press release to TechCrunch. “We’re happy with what Windsurf has constructed over the past 4 years and are excited to see it transfer ahead with their world class group and kick-start the subsequent part.”
As of Friday, Windsurf’s head of enterprise, Jeff Wang, will take over because the startup’s interim CEO, he introduced in a post on social media. Most of Windsurf’s 250 individual group is just not headed to Google DeepMind and can proceed providing its AI coding instruments for enterprise clients.
OpenAI’s deal to accumulate Windsurf has reportedly been a significant rigidity level within the ChatGPT-maker’s contract renegotiations with Microsoft. Microsoft at present has entry to all of OpenAI’s mental property, nevertheless, OpenAI didn’t need its largest backer to get Windsurf’s AI coding know-how as properly, in keeping with earlier reporting from the Wall Street Journal.
Earlier on Friday, Fortune reported that the exclusivity period on OpenAI’s offer to acquire Windsurf had expired, that means that Windsurf would now be free to discover different gives. It appears that evidently Windsurf didn’t wait lengthy.
In current months, Windsurf has been one of many hottest AI coding startups available on the market. In April, the startup’s ARR reached about $100 million, TechCrunch earlier reported, up from about $40 million months earlier. That fast progress attracted suitors comparable to OpenAI, and apparently Google.
The addition of Mohan, Chen, and different Windsurf leaders may considerably increase Google’s skill to construct AI coding instruments. In current months, AI mannequin suppliers have targeted extra on providing AI coding functions to entice builders. Anthropic has boosted its income considerably on the again of its AI coding device, Claude Code, whereas OpenAI continues to pitch Codex, its AI coding agent, to software program engineers.
Windsurf, alternatively, is left in a way more unsure place on account of this deal. Different AI startups which have been reverse-acquihired have struggled to maintain the identical momentum they’d beforehand. Scale AI lost customers as a result of its deal with Meta, whereas Inflection needed to pivot entirely from consumer AI after its take care of Microsft.
It appears doubtless that Windsurf may undergo an analogous destiny.