Google strikes $2.4 billion deal to license technology from AI-coding startup Windsurf and recruit its CEO and select R&D team into DeepMind: WSJ

Google strikes $2.4 billion deal to license technology from AI-coding startup Windsurf and recruit its CEO and select R&D team into DeepMind: WSJ

Google has struck a significant deal with AI-coding startup Windsurf, securing a $2.4 billion license to the company's technology while recruiting its CEO and select R&D team into DeepMind. The deal, announced on July 11, 2025, marks a strategic move by Google to bolster its position in the rapidly evolving AI coding landscape.

According to reports from TechCrunch [1], Google DeepMind has hired Windsurf's CEO Varun Mohan, co-founder Douglas Chen, and several key engineers. The deal does not involve Google acquiring Windsurf but rather securing a non-exclusive license to certain technologies. This move is part of a growing trend of "reverse-acquihires," where major tech firms hire top talent and license technology without acquiring the entire company.

Windsurf, which reached a $100 million annual recurring revenue (ARR) in April 2025, had attracted major suitors due to its rapid growth. The startup's technology has been in high demand, with companies like OpenAI and Google vying for its capabilities. However, 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 [2].

Following the leadership exits, Jeff Wang, Windsurf's head of business, has stepped in as interim CEO. Most of the 250-person team will continue focusing on enterprise AI coding tools, but the company's long-term trajectory remains uncertain. Similar reverse-acquihire startups like Scale AI and Inflection have struggled to maintain momentum post-deal.

The deal is expected to significantly boost Google's ability to build AI coding tools, as the company aims to stay competitive in the AI race. As AI model providers increasingly focus on offering AI coding applications to entice developers, Google's acquisition of Windsurf's talent and technology positions it well to capitalize on this trend.

References:
[1] https://techcrunch.com/2025/07/11/windsurfs-ceo-goes-to-google-openais-acquisition-falls-apart/
[2] https://tribune.com.pk/story/2555453/openai-left-behind-as-windsurfs-stars-defect-to-google-deepmind