OpenAI attempted to acquire an AI programming company, but the deal was scuttled by Google.
On July 12th local time, according to foreign media reports, the $3 billion acquisition of AI programming startup Windsurf by OpenAI has been unsuccessful, with the latter turning to Google’s embrace. Google announced that it would hire Windsurf’s CEO Varun Mohan, co-founder Douglas Chen, and some R&D staff into its DeepMind team.
According to the statement, Google did not acquire any shares in Windsurf nor hold any control over it. Windsurf will remain independent, with approximately 250 employees continuing to work there. It was revealed that as part of the partnership, Google will pay a license fee of $2.4 billion to obtain the technology licensing rights from Windsurf. Investors in Windsurf will receive a portion of this license fee as a return on investment and retain their equity stake.
Furthermore, insiders stated that the acquisition deal between OpenAI and Windsurf had been canceled, partly due to tensions between OpenAI and its main investor, Microsoft. Windsurf does not wish for Microsoft to acquire its intellectual property, while OpenAI failed to reach an agreement with Microsoft on this matter.
In April this year, market news suggested that OpenAI was in discussions with Windsurf about a potential acquisition, with the price being around $3 billion. If this acquisition were successful, it would be the largest acquisition deal in OpenAI’s history.
Public records show that Windsurf was established in 2021, previously known as Codeium, headquartered in California, USA, and launched the AI programming assistant Cascade.
Since its establishment in 2021, the company has received over $200 million in venture capital, with investment institutions including Founders Fund, General Catalyst, Green Oaks, and Kleiner Perkins.
In September 2024, Windsurf completed a round of financing worth $150 million, led by General Catalyst, at which time the company’s valuation was $1.25 billion. In February this year, Windsurf initiated negotiations for a new round of financing, aiming for a target valuation of $2.85 billion.
Foreign media analysis points out that large tech companies are fiercely competing for the leadership and technology of AI startups rather than directly acquiring them, a trend aimed at circumventing antitrust scrutiny.
Recently, Meta’s CEO Mark Zuckerberg aggressively recruited talent for the super-intelligent team responsible for the company’s AI efforts. Among the latest hires were Pang Ruoming, who led Apple’s Foundation Model (AFM) team, reportedly earning an annual salary of over $100 million. Meta also acquired a 49% stake in AI data labeling company Scale AI for $14.3 billion in June this year, allowing Scale AI’s founder and CEO Alexandr Wang to lead the super-intelligent team.
Similarly, in 2024, Microsoft hired the founder and most employees of Inflection AI, paying $650 million for the AI software license. Amazon “acquired” most of Adept AI’s employees, while Google hired executives and some employees from Character.AI for more than $2.5 billion. However, regulatory authorities have launched investigations into some of these transactions.