In a surprising turn of events, Google DeepMind has hired the CEO and co-founder of AI coding startup Windsurf just days after OpenAI’s $3 billion acquisition deal reportedly collapsed.
According to The Verge and Bloomberg, Google will pay $2.4 billion to license Windsurf’s technology and onboard key members of its leadership, including CEO Varun Mohan and co-founder Douglas Chen. The tech giant confirmed the hiring to TechCrunch, emphasizing that it is not acquiring Windsurf or taking a stake in the company.
“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.
This type of arrangement often referred to as a reverse-acquihire has become increasingly common among Big Tech firms. By licensing technology and hiring talent without formally acquiring companies, firms like Google and Microsoft can avoid regulatory scrutiny while still strengthening their positions in the AI arms race.
What Happened to OpenAI’s Acquisition?
OpenAI’s proposed acquisition of Windsurf had been a point of tension in its partnership with Microsoft. As reported by The Wall Street Journal, OpenAI was hesitant to give Microsoft, its largest backer, indirect access to Windsurf’s AI coding tech. Once the exclusivity period on OpenAI’s offer expired, Windsurf quickly explored other options ultimately landing a licensing and hiring deal with Google DeepMind.
What’s Next for Windsurf?
Despite losing its co-founders and some top researchers, Windsurf isn’t shutting down. Interim CEO Jeff Wang formerly head of business at the company announced on social media that most of the 250-person team will remain, continuing to offer enterprise-grade AI coding tools.
The startup had become one of the most sought-after AI firms in recent months, growing its annual recurring revenue (ARR) from $40 million to $100 million in less than a year. However, its future now appears uncertain. Other AI startups that have undergone similar talent losses like Scale AI and Inflection have struggled to maintain their growth trajectories.
Google’s Big AI Coding Bet
By bringing Mohan, Chen, and other leaders onboard, Google is doubling down on its ambition to dominate the AI coding space. The move follows similar strategies by Microsoft and Anthropic, which have seen strong developer adoption of AI coding tools like Copilot and Claude Code.
For Google, this deal adds critical talent and innovation at a time when competition among generative AI leaders is intensifying and AI-powered software development is becoming a key battleground.