OpenAI’s deal to accumulate the viral AI coding startup Windsurf for $3 billion fell aside on Friday, in accordance with The Verge.
In a surprising twist, Google DeepMind is now hiring Windsurf CEO Varun Mohan, co-founder Douglas Chen, and among 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 crew to Google DeepMind to advance our work in agentic coding,” mentioned Google spokesperson Chris Pappas in an e 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 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 performed 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 Large Tech firms improve their place within the AI race with out drawing regulatory scrutiny.
“We’re excited to be becoming a member of Google DeepMind together with among the Windsurf crew,” mentioned Mohan and Chen in a press release 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 particular person crew is just not headed to Google DeepMind and can proceed providing its AI coding instruments for enterprise prospects.
OpenAI’s deal to accumulate Windsurf has reportedly been a significant stress level within the ChatGPT maker’s contract renegotiations with Microsoft. Microsoft at the moment 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 accordance with earlier reporting from the Wall Avenue Journal.
Earlier on Friday, Fortune reported that the exclusivity interval on OpenAI’s supply to accumulate Windsurf had expired, that means that Windsurf would now be free to discover different presents. 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 may considerably increase Google’s means to construct AI coding instruments. In latest months, AI mannequin suppliers have centered 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, then again, is left in a way more unsure place on account 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 prospects on account 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 may endure an identical destiny.
