Windsurf’s CEO goes to Google; OpenAI’s acquisition falls apart

OpenAI’s deal to acquire the viral AI coding startup Windsurf for $3 billion fell apart on Friday, in accordance 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 group to Google DeepMind to advance our work in agentic coding,” stated Google spokesperson Chris Pappas in an e mail to TechCrunch.

Notably, Google will not be taking a stake in Windsurf and won’t have any management over the corporate. Nevertheless, as a part of the deal, Google can have a nonexclusive license to sure Windsurf expertise, that means the AI coding startup stays free to license its expertise to others.

The deal represents the AI ecosystem’s newest reverse-acquihire, by which an organization hires a startup’s prime expertise and licenses its expertise however doesn’t outright purchase the corporate. Google beforehand performed an identical deal to hire back Character.AI CEO Noam Shazeer, as did Microsoft to rent Mustafa Suleyman. These offers have helped a number of Large 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 group,” stated Mohan and Chen in an announcement to TechCrunch. “We’re happy with what Windsurf has constructed during the last 4 years and are excited to see it transfer ahead with their world class group 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 post on social media. Most of Windsurf’s 250 particular person group will not be headed to Google DeepMind and can proceed providing its AI coding instruments for enterprise prospects.

OpenAI’s deal to amass Windsurf has reportedly been a serious pressure level within the ChatGPT maker’s contract renegotiations with Microsoft. Microsoft at the moment has entry to all of OpenAI’s mental property; nevertheless, OpenAI didn’t need its largest backer to get Windsurf’s AI coding expertise as properly, in accordance with earlier reporting from the Wall Street Journal.

Earlier on Friday, Fortune reported that the exclusivity period on OpenAI’s offer to acquire Windsurf had expired, that means that Windsurf would now be free to discover different presents. It appears that evidently Windsurf didn’t wait lengthy.

In current 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 fast development attracted suitors akin to OpenAI and apparently Google.

The addition of Mohan, Chen, and different Windsurf leaders might considerably increase Google’s capability to construct AI coding instruments. In current months, AI mannequin suppliers have centered extra on providing AI coding purposes to entice builders. Anthropic has boosted its income considerably on the again of its AI coding software, 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 lost customers as a result of its deal with Meta, whereas Inflection needed to pivot entirely from consumer AI after its take care of Microsoft.

It appears probably that Windsurf might endure an identical destiny.