Alphabet’s Google has hired several top staff members from AI code generation start-up Windsurf, the companies announced on Friday, in a surprise move after an attempt by its rival OpenAI to acquire the start-up.
Google is paying $2.4bn in licence fees as part of the deal to use some of Windsurf’s technology under non-exclusive terms, according to a person familiar with the arrangement. Google will not take a stake or any controlling interest in Windsurf, the person said.
OpenAI
Windsurf CEO Varun Mohan, co-founder Douglas Chen, and some members of the coding tool’s research & development team will join Google’s DeepMind AI division.
The deal followed months of discussions Windsurf was having with OpenAI to sell itself in a deal that could value it at $3bn, highlighting the interest in the code-generation space which has emerged as one of the fastest-growing AI applications, sources familiar with the matter said in June.
OpenAI could not be immediately reached for a comment.
The former Windsurf team will focus on agentic coding initiatives at Google DeepMind, primarily working on the Gemini project.
“We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” Google said in a statement.
The unusual deal structure marks a win for backers for Windsurf, which has raised $243m from investors including Kleiner Perkins, Greenoaks and General Catalyst, and was last valued at $1.25bn one year ago, according to PitchBook.
Windsurf investors will receive liquidity through the licence fee and retain their stakes in the company, sources said.
Acquihire
Google’s surprise swoop mirrors its deal in August 2024 to hire employees from chatbot start-up Character.AI.
Big Tech peers, including Microsoft, Amazon and Meta, have similarly taken to these so-called acquihire deals, which some have criticised as an attempt to evade regulatory scrutiny.
Microsoft struck a $650m deal with Inflection AI in March 2024, to use the AI start-up’s models and hire its staff, while Amazon hired AI firm Adept’s co-founders and some of its team last June.
Meta took a 49% stake in Scale AI in June in the biggest test yet of this increasing form of business partnerships.
Unlike acquisitions that would give the buyer a controlling stake, these deals do not require a review by US antitrust regulators. However, they could probe the deal if they believe it was structured to avoid those requirements or harm competition. Many of the deals have since become the subject of regulatory probes.
The development comes as tech giants, including Alphabet and Meta, aggressively chase high-profile acquisitions and offer multi-million-dollar pay packages to attract top talent in the race to lead the next wave of AI.
Windsurf head of business Jeff Wang has been appointed its interim CEO and Graham Moreno, vice-president of global sales, will be president, effective immediately.
The majority of Windsurf’s about 250 employees will remain with the company, which has announced plans to prioritise innovation for its enterprise clients.
Reuters
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