OpenAI’s plan to buy AI coding startup Windsurf for roughly three billion dollars ended when the exclusivity period expired on July 11, 2025. Reports say that back‑and‑forth with Microsoft over licensing terms contributed to the breakdown. Soon after OpenAI’s offer lapsed, Google DeepMind stepped in to license Windsurf’s technology for two point four billion dollars and to hire its senior team.
Google DeepMind Licenses Technology
Under the agreement, Google obtained a non‑exclusive license to Windsurf’s AI coding tools. This deal does not give Google any equity in the startup but allows DeepMind to integrate the AI into its agent-based coding projects within the Gemini suite. The license payment of two point four billion dollars provides liquidity to Windsurf’s investors without subjecting the company to a full acquisition.
Leadership Joins Google
Windsurf co‑founders Varun Mohan and Douglas Chen, among others, will lead agentic coding efforts at Google DeepMind. Mohan will focus on advancing AI agents that can write test code, refactor projects, and automate developer workflows. Most of the remaining two hundred fifty employees at Windsurf will stay on under interim CEO Jeff Wang, who was promoted to guide the company through this transition.
Impact on OpenAI and Windsurf
The unsuccessful deal made by OpenAI to purchase Windsurf sourced its relationship with one of its deepest financiers, Microsoft, which can access the intellectual property of OpenAI. Under the initial arrangement, Microsoft had requested it to be provided access to the tools in Windsurf, an aspect that OpenAI was opposed to. In the case of Windsurf, the result is that it does not affect its autonomy and enables the fledgling to keep on licensing its technology widely. However, it might be difficult to maintain its pace due to the loss of its founding leaders.
Significance in the AI Talent Race
This arrangement follows a trend of “reverse‑acquihires” in which major tech companies license technology and absorb talent without buying the entire startup. This is not the first Google strategy to apply to the previous CEO of Character.AI, and not the first Microsoft strategy to approach the founders of Inflection. This is because, as more companies need AI coding specialists, such deals enable companies to boost their ranks within a short period without going through regulatory requirements.
The acquisition of the Windsurf core by Google DeepMind emphasizes the importance of AI code tooling to the future of software work, since it is the next step in a software development revolution. After spending billions of dollars on talent acquisition and licensing, the future of programming assistance is still a fight that is yet to be won.
