Google Is Said To Pay $2.4 Billion For Windsurf Assets, Talent
Windsurf didn’t want Microsoft to have access to its intellectual property — a condition that OpenAI was unsuccessful in getting Microsoft’s agreement on, people familiar said.
Alphabet Inc.’s Google struck a deal to pay about $2.4 billion for top talent and licensing rights from artificial intelligence coding startup Windsurf following the collapse of Windsurf’s agreement to be bought by Google rival OpenAI, according to people familiar with the matter.
Google is hiring Windsurf Chief Executive Officer Varun Mohan and co-founder Douglas Chen, along with a small group of staffers, to work at its DeepMind artificial intelligence unit, according to a statement Friday. The company declined to comment on the financial terms, which it said don’t include taking a stake in Windsurf.
Windsurf had previously agreed to be purchased by OpenAI for $3 billion, but the deal unraveled in part because of tension with Microsoft Corp., a major OpenAI investor, said people with knowledge of the matter, who asked not to be identified discussing private deliberations and purchase terms.
Windsurf didn’t want Microsoft to have access to its intellectual property — a condition that OpenAI was unsuccessful in getting Microsoft’s agreement on, people familiar said. That was one of several sticking points in Microsoft and OpenAI’s ongoing talks about the AI company’s effort to restructure into a commercial entity. Microsoft’s existing agreement with OpenAI says the software giant is entitled to access the startup’s technology.
OpenAI thought it had an agreement with Windsurf and almost announced the acquisition in early May, according to people familiar with the deal. There had been a signed letter of intent, and Windsurf investors were given what’s known as waterfall agreements, notifying each party how much money they were expected to make, the people said.
An OpenAI spokesperson said Friday that the exclusivity period for its acquisition offer had lapsed, leaving Windsurf free to consider other bids. Microsoft and Windsurf declined to comment.
Read More: Microsoft Plays Coy About OpenAI Partnership: Businessweek Daily
Big tech companies have been snapping up executives and technology from promising AI startups as part of deals that stop short of full acquisitions — moves that some critics have said were structured to avoid antitrust scrutiny.
Last year, Microsoft hired the founders and much of the staff of Inflection AI and licensed the company’s AI software. In similar arrangements, Amazon.com Inc. hired top executives and other employees from startup Adept AI Labs Inc., and Google brought on Character.AI’s co-founders as part of a licensing deal. Despite the transactions’ structures, government regulators have opened probes into some of these kinds of deals.
Last month, Meta Platforms Inc. took a 49% stake in AI data-labeling startup Scale AI for more than $14 billion and hired co-founder Alexandr Wang for a new team building AI “superintelligence.” Since then, Meta has been recruiting other top AI executives from rivals Google, OpenAI and Apple Inc. as the technology leaders escalate their efforts to outdo one another.
Meta has been making unprecedented compensation offers as it seeks to woo talent for its superintelligence lab, including a more than $200 million package for a former Apple distinguished engineer.
Read More: Zuckerberg Debuts Meta ‘Superintelligence’ Group, More Hires
Windsurf, formally called Exafunction Inc., is part of a crop of startups building AI-driven coding assistants — systems capable of tasks like writing code based on natural language prompting. Founded in 2021, Windsurf has raised more than $200 million in venture capital funding, according to PitchBook data. Other investors include Greenoaks Capital Partners and AIX Ventures.
Bloomberg News initially reported in April that OpenAI was in talks to buy Windsurf.
