OpenAI’s Windsurf deal is off — and Windsurf’s CEO is going to Google | The Verge
In a surprising shake-up in the AI world, OpenAI’s $3 billion deal to buy the fast-growing coding startup Windsurf has officially fallen through. Instead, Google DeepMind has scooped up Windsurf’s top leaders—including CEO Varun Mohan and co-founder Douglas Chen—along with some of the startup’s top researchers.
Google confirmed the hiring, calling it a move to boost their work in “agentic coding”, a type of AI that helps write and manage code on its own.
But here’s the twist: Google isn’t buying Windsurf. They won’t own any part of the company. Instead, they’ve secured a nonexclusive license to use some of Windsurf’s tech. That means Windsurf can still offer its tools to others too.
This kind of deal is known as a reverse-acquihire—where a big company hires a startup’s best talent and licenses its technology without buying the company outright. It’s a strategy that helps tech giants like Google and Microsoft stay competitive in the AI race while avoiding antitrust scrutiny.
In fact, Google has done something similar before, hiring back Character.AI’s CEO. Microsoft did it too with Mustafa Suleyman from Inflection.
In a joint statement, Mohan and Chen said, “We’re proud of what Windsurf has built over the past four years and excited to join Google DeepMind to take the next step.”
With Mohan and Chen leaving, Windsurf’s Head of Business, Jeff Wang, will step in as interim CEO. Most of Windsurf’s 250 employees are staying with the company and will continue supporting its enterprise AI coding tools.
Meanwhile, OpenAI’s failed acquisition may cause waves in its partnership with Microsoft. According to The Wall Street Journal, OpenAI was wary of giving Microsoft—its biggest investor—access to Windsurf’s powerful coding technology.
Earlier in the day, Fortune reported that the exclusivity window for OpenAI’s offer had expired, meaning Windsurf was free to entertain other opportunities. And it didn’t take long for Google to swoop in.
Windsurf has had an impressive rise. Just a few months ago, its annual recurring revenue jumped from $40 million to $100 million, catching the attention of top players like OpenAI and Google.
Now, with key leadership gone, Windsurf faces an uncertain future. Other startups that lost their founders to tech giants—like Scale AI and Inflection—have struggled to keep up momentum afterward. Windsurf may be heading down the same road.
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