Google has employed several key staff team members from Windsurf, a startup known for its AI code generation tools. The move follows failed acquisition talks between Windsurf and OpenAI.
Under the deal, Google will pay $2.4 billion in licensing fees to use some of Windsurf’s technology. It won’t take equity or a controlling interest but instead, the arrangement centres around bringing Windsurf’s people and software into Google’s DeepMind unit.
Windsurf CEO Varun Mohan, co-founder Douglas Chen, and members of the R&D team will now work on Google’s Gemini project. According to Google, their focus will be on “agentic coding” – an effort to build AI that can assist in more autonomous coding tasks.
The group had been working on tools that help generate code using AI, an area that’s gained momentum as tech firms race to build smarter development assistants. While Windsurf kept a low profile, the company had reportedly attracted acquisition interest from OpenAI earlier this year in a deal that could have valued it at $3 billion.
The failed talks with OpenAI cleared the way for Google to step in. While OpenAI declined to comment, Google said it’s “excited to welcome some top AI coding talent” to DeepMind.
A different kind of deal
Instead of a full acquisition, Google’s deal mirrors a growing trend among big tech companies: hire the people, license the tech, and leave the startup intact.
Windsurf’s investors – including Kleiner Perkins, Greenoaks, and General Catalyst – will retain their stakes. They’ll also get returns from the licensing fees. Jeff Wang, formerly head of business at Windsurf, will now serve as interim CEO and most of the company’s 250 employees will stay on.
These kinds of “acquihire” deals have become more common in AI. They help companies like Google or Meta bring in specialised talent without triggering the regulatory reviews that come with buying a business outright.
In the past year, Microsoft struck a $650 million deal with Inflection AI to hire its team. Amazon brought over staff from AI firm Adept, Meta hired staff away from Character.AI and also bought a large stake in Scale AI. While the deals stop short of acquisitions, some have drawn scrutiny from regulators for how they’re structured.
OpenAI under pressure
The Windsurf deal is one of several recent blows for OpenAI. Once considered far ahead in the AI race, the company now faces more competition from rivals.
Even as OpenAI brings in more funding – raising $40 billion earlier this year – it’s losing talent. Meta recently hired three of its top researchers, and other OpenAI staff are reported to have suffered burnout at the company, prompting a weeklong break for engineers.
CEO Sam Altman has publicly acknowledged the talent war. On a recent podcast, he claimed Meta offered signing bonuses as high as $100 million to lure OpenAI staff. One of the researchers who left denied that figure but confirmed they had joined Meta.
Despite the staff churn, OpenAI has also been hiring, reportedly bringing in people from Tesla and xAI. But internal tensions remain, particularly over how revenue and control are split with Microsoft – its biggest investor.
At the core of the tension is a clause in its agreement that defines AGI (artificial general intelligence) in profit terms. If OpenAI hits $100 billion in profits, Microsoft no longer gets a share of its revenue. Microsoft CEO Satya Nadella has questioned the value of this AGI benchmark, calling it “nonsensical.”
What this means for developers
The Windsurf team’s move to Google DeepMind suggests that AI-assisted coding remains a priority for tech giants. While the specific tools Windsurf was building remain mostly under wraps, its expertise in code generation fits into a larger effort to make AI write, test, or even plan code more independently.
At DeepMind, the team will be working on Gemini’s agentic coding efforts, a project aimed at pushing AI beyond simple autocomplete tasks. That includes giving AI the ability to carry out more complex development goals, possibly with less human input.
For developers, this signals growing investment in tools that could reshape how code is written in the future. Whether Gemini will compete directly with GitHub Copilot or other AI pair programmers remains to be seen, but Windsurf’s team is now in a position to help shape that future.
(Photo by Luca Bravo)
See also: Vibe coding: Future of development or risky shortcut?
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