OpenAI’s $3-B Deal With AI Coding Startup Windsurf Collapses

Google has struck a licensing deal with AI coding startup Windsurf, effectively ending OpenAI’s $3 billion acquisition bid after the exclusivity period on the offer expired, Alli Garfinkle reported for Fortune Tech.

Windsurf, originally founded as Codeium in 2021 by a group of MIT classmates, rebranded earlier this year. I Image: Windsurf

The agreement allows Windsurf to continue operating independently while key team members join Google DeepMind, a source familiar with the matter told Fortune.

"We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” a Google spokesperson said.

The collapse of the deal marks a setback for OpenAI, which has recently faced talent raids from rivals like Meta.

An OpenAI spokesperson confirmed that the exclusivity window for the acquisition—entered into in May—had expired, freeing Windsurf to explore other partnerships.

AI coding startups that use generative AI to assist programmers are now one of tech’s hottest categories. Microsoft’s GitHub Copilot, built on OpenAI technology, has gained wide adoption.

Meanwhile, VC-backed startup Cursor recently raised $900 million at a $9 billion valuation.

Windsurf, originally founded as Codeium in 2021 by a group of MIT classmates, rebranded earlier this year and is backed by Founders Fund, General Catalyst, Greenoaks, and Kleiner Perkins.