In a surprise move following an effort by rival OpenAI to purchase the start-up, Google recently revealed that it has hired a number of senior employees from AI code generation start-up Windsurf.
According to a person familiar with the agreement, Google is paying $2.4 billion in license fees as part of the agreement to use parts of Windsurf’s technology on non-exclusive terms. According to a media report, Google will not acquire a stock or any kind of controlling position in Windsurf.
Co-founder Douglas Chen, Windsurf CEO Varun Mohan, and a few members of the coding tool’s R&D team will join Google’s DeepMind AI group.
According to media reports from June, the deal came after months of talks between Windsurf and OpenAI to sell the company for a price that may reach $3 billion. This deal demonstrated the interest in the code-generation field, which has become one of the fastest-growing AI applications.
The New Team to Work Primarily on Gemini Project
The former Windsurf team will work mostly on the Gemini project at Google DeepMind, where they will concentrate on agentic coding efforts. In a statement, Google expressed its excitement about bringing some of Windsurf’s best AI coding expertise to Google DeepMind to further the company’s agentic coding efforts.
The unique purchase structure is a victory for Windsurf’s backers. According to PitchBook, the company was last valued at $1.25 billion a year ago and has raised $243 million from investors such as Kleiner Perkins, Greenoaks, and General Catalyst.
According to reports Windsurf investors would keep their ownership holdings in the business and get liquidity through the licence fee. Google’s unexpected move is similar to its agreement to acquire staff from chatbot startup Character.AI in August 2024.
Similar responses have been given to these so-called acquihire agreements by their Big Tech contemporaries, Microsoft, Amazon, and Meta, which some have criticised as an effort to avoid regulatory scrutiny.
Other Players Also Strengthening their AI Infrastructure
Amazon hired the co-founders and some of the employees of the AI business Adept last June, while Microsoft signed a $650 million deal with Inflection AI in March 2024 to use the AI start-up’s models and hire its employees.
In June, Meta made the largest test to date of this growing type of corporate alliances by acquiring a 49% interest in Scale AI. These transactions do not need to be reviewed by US antitrust authorities, in contrast to acquisitions that would grant the buyer a controlling interest.
If they think the deal was set up to circumvent those standards or hurt competition, they could still investigate it. Since then, other transactions have been the focus of regulatory investigations.
In an effort to attract elite people in the competition to lead the next wave of AI, tech titans like Alphabet and Meta are aggressively pursuing high-profile acquisitions and offering multi-million dollar compensation packages.
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