Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google has finalized a $2.4 billion agreement to license technology from AI coding startup Windsurf. This deal also includes hiring Windsurf’s CEO and a select group of its employees.
What Happened: Google has reached a $2.4 billion deal with Windsurf, an AI coding startup, according to a report by The Wall Street Journal. The agreement involves licensing technology and hiring the company's CEO, Varun Mohan, cofounder Douglas Chen and some of the company's key R&D employees to bring them to the Google DeepMind team.
This development comes after OpenAI attempted to acquire Windsurf for $3 billion. However, negotiations fell through due to objections from Microsoft (NASDAQ:MSFT), OpenAI’s largest investor, particularly concerning access to Windsurf’s technology.
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Google’s arrangement will see a small number of Windsurf employees join its DeepMind division to work on agentic coding. The tech giant will gain a nonexclusive license to some of Windsurf's technology but will not acquire any equity in the startup. Most Windsurf employees will remain with the company.
Why It Matters: The backdrop to this deal is a fierce competition among tech giants to dominate the AI landscape. Earlier this year, OpenAI had agreed to acquire Windsurf for $3 billion. However, the acquisition fell apart, as noted by TechCrunch, when Microsoft, a key investor in OpenAI, raised concerns about access to Windsurf’s technology.
The failed acquisition attempt by OpenAI underscores the competitive nature of Silicon Valley, where major tech companies are in a race to secure top AI talent. Google previously invested $2.7 billion to hire former researcher Noam Shazeer and license technology from Character.AI, a startup he founded.
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