OpenAI’s deal to accumulate the viral AI coding startup Windsurf for $3 billion fell aside on Friday, in keeping with The Verge.
In a stunning twist, Google DeepMind is now hiring Windsurf CEO Varun Mohan, co-founder Douglas Chen, and among the startup’s high researchers. A Google spokesperson confirmed the hiring of Windsurf’s leaders in an announcement to TechCrunch.
Notably, Google just isn’t 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 expertise, which means the AI coding startup stays free to license its expertise to others.
Bloomberg reviews that Google is paying $2.4 billion to license Windsurf’s expertise and rent its high staff.
“We’re excited to welcome some high AI coding expertise from Windsurf’s group to Google DeepMind to advance our work in agentic coding,” stated Google spokesperson Chris Pappas in an electronic mail to TechCrunch.
The deal represents the AI ecosystem’s newest reverse-acquihire, by which an organization hires a startup’s high expertise and licenses its expertise however doesn’t outright purchase the corporate. Google beforehand carried out 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 Massive 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 among the Windsurf group,” stated Mohan and Chen in an announcement to TechCrunch. “We’re happy with what Windsurf has constructed over the past 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 publish on social media. Most of Windsurf’s 250 particular person group just isn’t headed to Google DeepMind and can proceed providing its AI coding instruments for enterprise prospects.
Massive welcome to @_mohansolo and others from the Windsurf group becoming a member of Deepmind : )— Logan Kilpatrick (@OfficialLoganK) July 11, 2025
OpenAI’s deal to accumulate Windsurf has reportedly been a significant rigidity 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 effectively, in keeping with earlier reporting from the Wall Road Journal.
Earlier on Friday, Fortune reported that the exclusivity interval on OpenAI’s supply to accumulate Windsurf had expired, which means that Windsurf would now be free to discover different gives. It appears that 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 similar to OpenAI and apparently Google.
The addition of Mohan, Chen, and different Windsurf leaders might considerably enhance Google’s skill to construct AI coding instruments. In latest 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 because of this deal. Different AI startups which have seen their leaders employed away have struggled to maintain the identical momentum they’d beforehand. Scale AI misplaced prospects because of its take care of Meta, whereas Inflection needed to pivot solely from client AI after its take care of Microsoft.
It appears possible that Windsurf might endure an identical destiny.
Replace 7:25 pm PT: This text was up to date to incorporate the reported worth Google paid Windsurf within the deal.
