Windsurf CEO, execs joins Google in AI deal after OpenAI acquisition falls through

Google is set to hire Windsurf CEO Varun Mohan, co-founder Douglas Chen, and some top researchers at the artificial intelligence startup. According to reports, the development happened after OpenAI’s deal to acquire the AI coding startup for $3 billion collapsed.

The news was confirmed by a company spokesperson.

According to the terms of the deal, Google is not expected to own a stake in Windsurf and it will not have any control over the firm. However, Google will hold a license to the technologies belonging to Windsurf. This means that the AI startup maintains the right to license its technology to other firms.

Google set to hire Windsurf’s executives

According to reports, Google will pay $2.4 billion to license Windsurf’s technology and hire its top executives. “We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” said Google spokesperson Chris Pappas.

The deal showcases the new trend in the artificial intelligence industry where a company hires the top talent in a startup and licenses its technology without outrightly owning the company. The move was first seen when Google agreed to hire Character.AI CEO Noam Shazeer. Deals like these have been beneficial to Big Tech firms, helping them boost their position in the AI race.

“We are excited to be joining Google DeepMind along with some of the Windsurf team,” said Mohan and Chen in a statement to TechCrunch. “We are proud of what Windsurf has built over the last four years and are excited to see it move forward with their world-class team and kick-start the next phase.”

According to a recent update on social media, the company’s head of business, Jeff Wang, is expected to take over as the interim CEO of the startup.

OpenAI’s acquisition talks with Windsurf collapse

Windsurf, which boasts 250 employees, is not headed by Google DeepMind. This means that it will continue to offer its AI coding tools to enterprise customers. Talks between OpenAI and Windsurf over an acquisition have been one of the factors hindering renegotiation between the ChatGPT firm and Microsoft.

According to a previous report from the Wall Street Journal, OpenAI did not want Microsoft, which is its largest backer, to gain access to Windsurf’s AI coding technology. This is because the platform has access to all the intellectual property owned by OpenAI.

Fortune had previously reported that the exclusivity period on OpenAI’s offer to acquire Windsurf was billed to expire, meaning that the firm could explore talks with other companies looking to do business.

It seems Windsurf didn’t wait for too long, cementing the deal with Google. Over the past months, Windsurf has been one of the hottest AI coding firms on the market. In April, the firm’s ARR hit close to $100 million, a jump from around $40 million that was reported months earlier. The growth attracted firms like OpenAI and Google.

The addition of Mohan, Chen, and other executives to Google could improve its ability to make its own AI coding tools. In the past few months, AI model firms have focused on offering AI coding applications to impress developers. Anthropic has also used its AI coding tool Claude Code to boost its revenue, while OpenAI continues to push its AI coding agent Codex to software engineers.

Other startups that have seen their leaders prized away from the firm have struggled greatly, with Scale AI a good example. The company abandoned consumer AI after entering a deal with Microsoft.

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