Google “Acquires” Windsurf
Katie Roof and Rachel Metz (in May, via Hacker News):
OpenAI has agreed to buy Windsurf, an artificial intelligence-assisted coding tool formerly known as Codeium, for about $3 billion, according to people familiar with the matter, marking the ChatGPT maker’s largest acquisition to date.
Windsurf, founded in 2021 by Varun Mohan and Douglas Chen, built a loyal developer base with its AI-native coding platform. The company’s flagship product, Windsurf Editor, supports enterprise-grade workflows and enables what co-founder Andrej Karpathy once called “vibe coding”—a kind of low-friction, AI-driven software creation process that’s reshaping how code gets written.
[…]
But OpenAI had a problem: Microsoft.
The tech giant—one of OpenAI’s largest investors with over $13 billion poured in since 2019—has rights to much of OpenAI’s IP under a sweeping 2023 agreement. That includes access to model weights, code, and yes, any IP OpenAI gains through acquisitions. In this case, Windsurf’s technology would fall into Microsoft’s lap by default.
That didn’t sit well with OpenAI—or Windsurf. Mohan reportedly made it clear he didn’t want Microsoft anywhere near the startup’s tech, given GitHub Copilot’s position as a direct competitor.
Hayden Field (via Hacker News):
OpenAI’s deal to buy Windsurf is off, and Google will instead hire Windsurf CEO Varun Mohan, cofounder Douglas Chen, and some of Windsurf’s R&D employees and bring them onto the Google DeepMind team, Google and Windsurf announced Friday.
Mohan and the Windsurf employees will focus on agentic coding efforts at Google DeepMind and work largely on Gemini. Google will not have any control over nor a stake in Windsurf, but it will take a non-exclusive license to some of Windsurf’s technology.
One oddity of prediction markets: the fine print matters.
Polymarket had a contract on whether OpenAI would acquire Windsurf before August. They didn’t, but they announced an acquisition, so the market still resolved as “yes.”
Dave Pack (via Dare Obasanjo):
Talked to a senior employee at windsurf and current employees are getting no pay out and are left with shell of a company to “run”. All the cash is going to founders and preferred equity holders.
See also: Hari Raghavan.
After looking into this, I think the original intent was for that $100M+ cash balance to indeed be used to give employee distributions via a dividend. It corresponds very closely to the unvested equity number.
But due to the legal overhead that attends any Big Tech acquisition nowadays, the founder was muzzled and couldn’t say this outright. He could only say “dividending out the balance is an option.”
So: the remaining Windsurf shareholders can take that option, dividend out the $100M to employees, and then choose to shut down the company. The outcome is then similar to an acquisition.
Previously:
