Google Hires Windsurf’s Top Team After OpenAI Deal Falls Apart

A major deal between OpenAI and AI startup Windsurf has fallen apart, and Google is now taking in the company’s top leaders.

OpenAI was planning to acquire Windsurf, a fast-growing AI coding startup, for around $3 billion. But according to The Verge, the deal was canceled. Instead, Windsurf CEO Varun Mohan, co-founder Douglas Chen, and several top researchers are now joining Google DeepMind, which is Google’s AI research division.

Google is not buying Windsurf or taking ownership of the company. However, it is paying $2.4 billion to license some of Windsurf’s technology. This means Windsurf can still continue as an independent company and work with other partners.

A Google spokesperson said the new hires will help strengthen their work on “agentic coding,” which focuses on advanced AI that can write code like a human developer.

Windsurf has been one of the most talked-about AI coding startups this year. Back in April, its yearly revenue reached about $100 million, up from $40 million just a few months before. This rapid rise attracted interest from companies like OpenAI and Google.

With the departure of its top leaders, Windsurf is now facing some uncertainty. In many cases, startups lose momentum after key people leave. For example, Inflection had to shift its focus after a similar move by Microsoft, and Scale AI lost clients after working with Meta.

Windsurf’s head of business, Jeff Wang, announced he will take over as interim CEO. Most of the company’s 250 employees are staying and will continue offering their AI coding services to enterprise clients.

The failed OpenAI deal may also increase tensions with Microsoft, which has access to OpenAI’s tech but would not have gained Windsurf’s coding tools through the canceled deal.