OpenAI’s attempt to acquire the AI coding startup Windsurf for $3 billion fell through on Friday, as reported by The Verge. In a surprising turn of events, Google DeepMind has now hired Windsurf CEO Varun Mohan, co-founder Douglas Chen, and some of the startup’s top researchers. A Google spokesperson confirmed this hiring in a statement to JS.
“We’re thrilled to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to further our work in agentic coding,” said Google spokesperson Chris Pappas in an email to JS. Google is not taking a stake in Windsurf, but as part of the deal, they will have a nonexclusive license to certain Windsurf technology, allowing the AI coding startup to still license its technology to others.
This move marks the latest reverse-acquihire in the AI ecosystem, where companies hire a startup’s top talent and license its technology without acquiring the company outright. Similar deals have been seen before with companies like Character.AI and Microsoft, helping Big Tech firms bolster their AI capabilities without drawing regulatory scrutiny.
Mohan and Chen expressed their excitement about joining Google DeepMind along with some of the Windsurf team in a statement to JS. Windsurf’s head of business, Jeff Wang, will now step in as the interim CEO of the startup, as most of the team will continue offering AI coding tools for enterprise customers.
The failed acquisition by OpenAI has reportedly caused tension in their contract renegotiations with Microsoft. OpenAI did not want Microsoft to gain access to Windsurf’s AI coding technology, which led to complications in their partnership. The exclusivity period on OpenAI’s offer to acquire Windsurf expired recently, allowing Windsurf to explore other opportunities.
Windsurf has been a highly sought-after AI coding startup, with rapid growth in revenue attracting interest from companies like OpenAI and Google. The addition of Windsurf’s leadership team to Google DeepMind could significantly enhance their AI coding capabilities, as the trend shifts towards offering AI coding applications to developers.
However, the future for Windsurf remains uncertain following this deal. Other AI startups that have been reverse-acquihired have struggled to maintain their momentum, facing challenges in sustaining their growth. It remains to be seen how Windsurf will navigate this new chapter in their journey.
