OpenAI Abandons $3B Acquisition of Windsurf, Google Snags Key Talent

OpenAI's planned $3B acquisition of AI-assisted coding tool Windsurf has fallen through. Instead, Google is reportedly scooping up Windsurf's talent, including CEO Varun Mohan and co-founder Douglas Chen. The deal's collapse marks a setback for OpenAI, which is backed by Microsoft.

OpenAI's planned acquisition of AI-assisted coding tool Windsurf, valued at $3 billion, has fallen through. Instead, Google is reportedly scooping up Windsurf's talent, including CEO Varun Mohan and co-founder Douglas Chen. The deal's collapse marks a setback for OpenAI, which is backed by Microsoft [1].

The exclusivity period on OpenAI's offer to acquire Windsurf expired, allowing the startup to explore other options. Google has struck a licensing deal with Windsurf, with key members of the team joining Google DeepMind. Windsurf will continue to operate as an independent startup under the deal [2].

OpenAI's failed acquisition comes as a blow to the generative AI startup, which has faced talent raids from rivals like Meta. Microsoft's GitHub Copilot, built on OpenAI's technology, has gained widespread adoption, and another AI coding startup, Cursor, recently raised a $900 million Series C, hitting a $9 billion valuation [2].

Windsurf, founded in 2021 by MIT classmates, initially called Codeium, changed its name to Windsurf in April. The startup's investors include Founders Fund, General Catalyst, Greenoaks, and Kleiner Perkins. TechCrunch reported in February that Windsurf was raising a funding round at a $2.85 billion valuation [2].

References:
[1] https://fortune.com/2025/07/11/the-exclusivity-on-openais-3-billion-acquisition-for-coding-startup-windsfurf-has-expired/
[2] https://finance.yahoo.com/news/openai-3-billion-deal-ai-203310478.html