- Google is paying $2.4 billion in license fees
- Windsurf investors will get liquidity while retaining stakes, sources say
- Deal structure mirrors other ‘acquihires’ by tech firms, could draw regulatory scrutiny
Alphabet’s (GOOGL.O), opens new tab Google has hired several key staff members from AI code generation startup Windsurf, the companies announced on Friday, in a surprise move following an attempt by its rival OpenAI to acquire the startup.
Google is paying $2.4 billion in license fees as part of the deal to use some of Windsurf’s technology under non-exclusive terms, according to a person familiar with the arrangement. Google will not take a stake or any controlling interest in Windsurf, the person added.
Windsurf CEO Varun Mohan, co-founder Douglas Chen, and some members of the coding tool’s research and development team will join Google’s DeepMind AI division.
The deal followed months of discussions Windsurf was having with OpenAI to sell itself in a deal that could value it at $3 billion, highlighting the interest in the code-generation space which has emerged as one of the fastest-growing AI applications, sources familiar with the matter told Reuters in June.
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OpenAI could not be immediately reached for a comment.
The former Windsurf team will focus on agentic coding initiatives at Google DeepMind, primarily working on the Gemini project.
“We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” Google said in a statement.
The unusual deal structure marks a win for backers for Windsurf, which has raised $243 million from investors including Kleiner Perkins, Greenoaks and General Catalyst, and was last valued at $1.25 billion one year ago, according to PitchBook.