OpenAI's $3 billion deal to acquire AI coding startup Windsurf (formerly Codeium) has fallen through. Unexpectedly, Google DeepMind is hiring Windsurf CEO Varun Mohan, co-founder Douglas Chen, and some of the startup's top researchers.
OpenAI's $3 billion deal to acquire AI coding startup Windsurf (formerly Codeium) has fallen through. Unexpectedly, Google DeepMind is hiring Windsurf CEO Varun Mohan, co-founder Douglas Chen, and some of the startup's top researchers.
As part of the deal, Google will not receive a stake in Windsurf or have any control over the company. It will also not receive an exclusive license to certain Windsurf technologies, meaning the startup is free to license its technology to others, TechCrunch writes .
Bloomberg reports that Google will pay $2.4 billion to license Windsurf's technology and hire its best employees.
“We are excited to welcome some of the leading AI coding talent from the Windsurf team to Google DeepMind to advance our work in agent coding,” Google spokesperson Chris Pappas said in an email to TechCrunch.
Windsurf's business chief Jeff Wang will take over as the startup's interim CEO starting Friday, he announced in a social media post. Most of Windsurf's 250-person team is not moving to Google DeepMind and will continue to offer its AI coding tools to enterprise clients.
“We are excited to join Google DeepMind along with some of the Windsurf team,” Mohan and Chen said in a statement to TechCrunch. “We are proud of what Windsurf has built over the past four years, and excited to see it move forward with its world-class team and embark on the next phase.”
Windsurf has been one of the hottest AI coding startups on the market in recent months. In April, the startup’s revenue reached nearly $100 million, up from about $40 million a month earlier. Such rapid growth has attracted both OpenAI and Google.
In May, it became known that OpenAI was negotiating to acquire Windsurf for $3 billion. This could be the largest purchase for the ChatGPT owner.
The deal later became a major point of tension between OpenAI and Microsoft over a contract renegotiation. Microsoft currently has access to all of OpenAI’s intellectual property, but according to previous Wall Street Journal reports, OpenAI did not want its largest backer to also receive Windsurf’s AI coding technology.
Earlier on Friday, Fortune reported that OpenAI's exclusivity offer to acquire Windsurf had expired, meaning Windsurf was now free to consider other offers. It looks like Windsurf didn't have long to wait.
But Windsurf could find itself in a precarious position as a result of the deal. Other AI startups that have hired executives have struggled to maintain the same momentum they had before. Scale AI lost customers as a result of the Meta deal, while Inflection had to abandon consumer AI entirely after the Microsoft deal. It’s likely that Windsurf could suffer a similar fate.
