In a strategic move to strengthen its AI coding capabilities, Alphabet’s Google has acquired key personnel from AI code generation startup Windsurf, outmaneuvering rival OpenAI, which had pursued a $3 billion acquisition of the company. Announced on July 11, 2025, the deal sees Google paying $2.4 billion in non-exclusive licensing fees for Windsurf’s technology, without taking a stake in the startup, according to an insider familiar with the arrangement.

Windsurf’s CEO Varun Mohan, co-founder Douglas Chen, and select members of its R&D team will join Google’s DeepMind division, focusing on advancing agentic coding initiatives, particularly for the Gemini project. “We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind,” Google stated, underscoring its commitment to leading the rapidly growing field of AI-driven code generation.

The deal, which followed months of negotiations between Windsurf and OpenAI, delivers a financial windfall for Windsurf’s investors, including Kleiner Perkins, Greenoaks, and General Catalyst, who retain their stakes in the company—last valued at $1.25 billion in 2024—while benefiting from the licensing fee’s liquidity. Windsurf, with approximately 250 employees, will continue operations under new leadership, with Jeff Wang appointed interim CEO and Graham Moreno as president, focusing on innovation for enterprise clients.

This “acquihire” deal mirrors recent moves by tech giants like Microsoft, which secured Inflection AI’s staff and models for $650 million in March 2024, and Amazon, which hired Adept’s co-founders in June 2024. Unlike traditional acquisitions, these arrangements bypass U.S. antitrust scrutiny, though regulators may investigate if they suspect efforts to skirt competition laws. Meta’s 49% stake in Scale AI in June 2025 exemplifies this trend of strategic partnerships in the AI race.

As Google and its rivals vie for dominance in AI, the integration of Windsurf’s expertise into DeepMind signals a bold step toward redefining coding through artificial intelligence, intensifying the competition for top talent and technology.