Google Acquires Windsurf for $2.4B, Gains Access to AI Tech and Talent

Google has finalized a $2.4 billion licensing agreement with AI coding startup Windsurf, gaining access to select technologies and hiring top leadership from the company. The agreement is non-exclusive, allowing Windsurf to retain the ability to license its technology to other parties and continue operating independently. Most of Windsurf's 250-person team will remain with the company, which will now be led by interim CEO Jeff Wang and president Graham Moreno. Google DeepMind will advance its efforts in agentic coding, autonomous AI systems that can write and improve software.

Google has finalized a $2.4 billion licensing agreement with AI coding startup Windsurf, gaining access to select technologies and hiring top leadership from the company. The agreement, announced on July 11, 2025, is non-exclusive, allowing Windsurf to retain the ability to license its technology to other parties and continue operating independently. Most of Windsurf's 250-person team will remain with the company, which will now be led by interim CEO Jeff Wang and president Graham Moreno.

Google DeepMind will leverage this deal to advance its efforts in agentic coding, which involves autonomous AI systems that can write and improve software. The hiring of Windsurf's CEO Varun Mohan, co-founder Douglas Chen, and select members of the R&D team will bolster Google's capabilities in this area. The move is part of a broader strategy by Google to stay competitive in the rapidly evolving AI landscape.

The deal comes amidst a trend of "reverse-acquihires," where major tech firms hire top talent and license technology without acquiring the entire company. This approach allows companies to gain access to cutting-edge technology and expertise without the complexity and cost of a full acquisition. Windsurf, which reached a $100 million annual recurring revenue (ARR) in April 2025, had attracted significant interest from companies like OpenAI and Google.

OpenAI's $3 billion bid to acquire Windsurf reportedly fell apart due to contract renegotiations with Microsoft, which already holds access to OpenAI's intellectual property [1]. The failure of this acquisition has paved the way for Google's deal with Windsurf.

The majority of Windsurf's employees will continue focusing on enterprise AI coding tools, while the company's long-term trajectory remains uncertain. Similar reverse-acquihire startups like Scale AI and Inflection have struggled to maintain momentum post-deal. However, the deal is expected to significantly boost Google's ability to build AI coding tools, positioning it well to capitalize on the growing trend of AI model providers offering AI coding applications to entice developers.

References:
[1] https://www.ainvest.com/news/google-strikes-2-4-billion-deal-license-technology-ai-coding-startup-windsurf-recruit-ceo-select-team-deepmind-wsj-2507/
[2] https://finance.yahoo.com/news/google-hires-windsurf-ceo-researchers-225455421.html