In a strategic move that reshapes the AI coding tools landscape, Google has struck a $2.4 billion deal with Windsurf AI, securing licensing rights to the startup's advanced technology and hiring its top leadership team.
The agreement, announced on July 11, 2025, brings Windsurf CEO Varun Mohan, co-founder Douglas Chen, and select researchers to Google DeepMind, where they'll focus on enhancing Google's agentic coding capabilities for its Gemini AI project. Unlike a traditional acquisition, Google isn't taking ownership of Windsurf, which will continue operating independently under interim CEO Jeff Wang.
"We're excited to welcome some top AI coding talent from Windsurf's team to Google DeepMind to advance our work in agentic coding," said Google spokesperson Chris Pappas. The deal represents what industry observers call a "reverse-acquihire," allowing Google to gain specialized talent and technology without triggering regulatory scrutiny.
The agreement follows the collapse of OpenAI's planned $3 billion acquisition of Windsurf, which reportedly fell apart due to tensions between OpenAI and Microsoft. According to sources, OpenAI was reluctant to give Microsoft access to Windsurf's intellectual property, creating a significant sticking point in negotiations.
Founded in 2021 by MIT classmates Mohan and Chen (initially as Codeium before rebranding to Windsurf in April 2025), the startup has developed cutting-edge AI coding tools that have gained significant traction among developers. Its flagship product, Windsurf Editor, features innovative capabilities like Cascade, an AI agent that can understand codebases, run commands, and generate code across multiple files.
The deal highlights the intensifying competition in the AI coding assistant market, where companies like Google, OpenAI, and Anthropic are racing to develop tools that can automate software development. For Google, acquiring Windsurf's talent strengthens its position against rivals while potentially accelerating the development of its Gemini AI model's coding capabilities.