OpenAI’s deal to amass the viral AI coding startup Windsurf for $3 billion fell aside on Friday, in keeping with The Verge.
In a stunning twist, Google DeepMind is now hiring Windsurf CEO Varun Mohan, co-founder Douglas Chen, and a number of the startup’s prime researchers. A Google spokesperson confirmed the hiring of Windsurf’s leaders in an announcement to TechCrunch.
“We’re excited to welcome some prime AI coding expertise from Windsurf’s crew to Google DeepMind to advance our work in agentic coding,” stated Google spokesperson Chris Pappas in an e mail to TechCrunch.
Notably, Google isn’t taking a stake in Windsurf and won’t have any management over the corporate. Nonetheless, as a part of the deal, Google can have a nonexclusive license to sure Windsurf know-how, that means the AI coding startup stays free to license its know-how to others.
The deal represents the AI ecosystem’s newest reverse-acquihire, through 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 identical deal to rent again Character.AI CEO Noam Shazeer, as did Microsoft to rent Mustafa Suleyman. These offers have helped a number of Huge Tech firms 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 number of the Windsurf crew,” stated Mohan and Chen in an announcement to TechCrunch. “We’re pleased with what Windsurf has constructed over the past 4 years and are excited to see it transfer ahead with their world class crew 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 put up on social media. Most of Windsurf’s 250 individual crew isn’t headed to Google DeepMind and can proceed providing its AI coding instruments for enterprise clients.
OpenAI’s deal to amass Windsurf has reportedly been a serious stress level within the ChatGPT maker’s contract renegotiations with Microsoft. Microsoft presently has entry to all of OpenAI’s mental property; nonetheless, 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 Avenue Journal.
Earlier on Friday, Fortune reported that the exclusivity interval on OpenAI’s supply to amass Windsurf had expired, that means that Windsurf would now be free to discover different provides. It appears that evidently Windsurf didn’t wait lengthy.
In latest 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 beforehand reported, up from about $40 million months earlier. That speedy progress attracted suitors resembling OpenAI and apparently Google.
The addition of Mohan, Chen, and different Windsurf leaders might considerably enhance Google’s capacity to construct AI coding instruments. In latest months, AI mannequin suppliers have targeted extra on providing AI coding purposes 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 because of this deal. Different AI startups which have seen their leaders employed away have struggled to maintain the identical momentum that they had beforehand. Scale AI misplaced clients because of its take care of Meta, whereas Inflection needed to pivot solely from client AI after its take care of Microsoft.
It appears probably that Windsurf might undergo an identical destiny.
