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Windsurf CEO Joins Google DeepMind; OpenAI Deal Collapses in AI Power Shift

July 13, 2025 2 min read Prime
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Google DeepMind Acquires Talent, Not the Company, in Shocking Windsurf Deal Twist

The rapidly evolving AI space witnessed a major disruption as Windsurf, one of the hottest AI coding startups, saw its $3 billion acquisition deal with OpenAI fall apart—only to be followed by an unexpected move: Google DeepMind hired Windsurf’s CEO Varun Mohan, co-founder Douglas Chen, and several top engineers.

Though Google hasn’t bought Windsurf, it has made a significant move. The tech giant is paying $2.4 billion to license Windsurf’s cutting-edge AI coding technology while welcoming its key leadership into the fold. This unique approach, known as a “reverse-acquihire,” allows Google to gain top AI talent without the scrutiny of full acquisitions.

“We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” said Google spokesperson Chris Pappas.

What Happens to Windsurf Now?

With Mohan and Chen departing, Jeff Wang, previously head of business, has stepped in as interim CEO. Most of Windsurf’s 250-member team remains, continuing to serve enterprise customers with its AI coding solutions. However, the startup now faces an uncertain future—leadership exits often lead to stunted growth or strategic pivots, as seen in the past with Inflection and Scale AI.

OpenAI’s Failed Bid and Microsoft Tensions

The deal’s collapse is more than a missed opportunity. According to reports, OpenAI’s failed acquisition of Windsurf has strained its relationship with Microsoft, which already has exclusive access to OpenAI’s IP. OpenAI was hesitant to let Microsoft—its largest backer—access Windsurf’s technology, complicating negotiations.

Earlier Friday, Fortune reported that OpenAI’s exclusivity period for the deal had expired, opening the door for others. Google wasted no time.

AI Coding Race Intensifies

The Windsurf episode underscores a growing trend: AI leaders are racing to build powerful coding agents. Google, OpenAI, and Anthropic are all competing fiercely for developer adoption. Google’s integration of Windsurf’s talent could give it a significant edge, especially as tools like Claude Code and Codex reshape the software development landscape.

As for Windsurf, while its tools remain valuable, losing key leadership may hinder its next growth phase. Only time will tell whether it can maintain momentum or fade into the background like others before it.

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