According to The Verge, the $3 billion deal by OpenAI to acquire the viral AI coding startup Windsurf fell through last Friday. Surprisingly, Google DeepMind quickly moved in and successfully recruited Windsurf's CEO Varun Mohan, co-founder Douglas Chen, and some of the company's top researchers.
A spokesperson for Google, Chris Pappas, confirmed the news in a statement to TechCrunch, saying: "We are pleased to welcome some of Windsurf's top AI coding talents to Google DeepMind to advance our work on agent-based coding."
According to Bloomberg, Google will pay up to $2.4 billion to obtain non-exclusive licenses for some of Windsurf's technologies and hire its core staff. Notably, Google did not directly acquire Windsurf or gain any equity or control over the company. This means that Windsurf can still freely license its technology to other companies.
This deal represents the latest "reverse acquisition" model in the artificial intelligence ecosystem, where large tech companies enhance their competitiveness in the AI field by hiring top talent from startups and obtaining their technology licenses, while avoiding potential regulatory scrutiny. Google previously rehired Character.AI's CEO Noam Shazeer, and Microsoft has also taken similar strategies to hire Mustafa Suleyman.
Mohan and Chen expressed their welcome to joining Google DeepMind. Meanwhile, Jeff Wang, Windsurf's business head, has been serving as the company's interim CEO since last Friday. Most members of Windsurf's existing 250-person team will not join Google DeepMind but will continue to provide their AI coding tools to enterprise clients.
The acquisition deal by OpenAI for Windsurf had become a major point of contention during its negotiations with Microsoft. According to a previous report by The Wall Street Journal, Microsoft currently owns all of OpenAI's intellectual property, and OpenAI did not want its biggest supporter to also gain access to Windsurf's AI coding technology. Earlier on Friday, Fortune reported that the exclusivity period for OpenAI's acquisition of Windsurf had expired, and Windsurf quickly sought other collaborations.
Over the past few months, Windsurf has been one of the most talked-about AI programming startups in the market. According to a previous report by TechCrunch, the company's annual recurring revenue (ARR) reached approximately $100 million this April, far exceeding the $40 million it had a few months earlier. Its remarkable growth rate attracted the attention of tech giants such as OpenAI and Google.
The addition of Windsurf's core team is undoubtedly expected to significantly enhance Google's capabilities in building AI coding tools. In recent years, AI model providers have increasingly focused on offering AI coding applications to attract developers. For example, Anthropic significantly boosted its revenue with its AI coding tool, Claude Code, and OpenAI continues to promote its AI coding agent Codex to software engineers.