(Reuters) – Alphabet's (Googl.o), Google hired several key staff from AI code generation startup Windsurf.
Google is paying a $2.4 billion licensing fee as part of the transaction to use some of Windsurf's technology on non-exclusive terms, according to anyone familiar with the arrangement. Google has no interest or dominant interest in Windsurf, the person added.
Windsurf CEO Varun Mohan, co-founder Douglas Chen, and some members of the coding tools research and development team will be joining Google's Deepmind AI division.
The deal followed months of discussion with Openai to sell in a deal that Windsurf could value it for $3 billion. This highlights the interest in the code generation space that has emerged as one of the fastest growing AI applications.
Openai could not be immediately contacted for comment.
The former Windsurf team focuses on Google Deepmind's agent coding initiative, working primarily on Gemini projects.
“We welcome the talent in top AI coding from the Windsurf team to Google Deepmind and we can work on agent coding,” Google said in a statement.
According to Pitchbook, the unusual trading structure has raised $243 million from investors including Kleiner Perkins, Greenoaks and General Catalyst, and is a victory for Windsurf backers, which was valued at $1.25 billion.
Windsurf investors will receive liquidity through licensing fees and maintain the company's shares, sources told Reuters.
“Ackihire” trading
Microsoft signed a $650 million contract with Felffecl AI in March 2024 to hire staff using the AI startup model. Amazon hired the co-founder and part of its team of AI company Adept last June.
Meta won a 49% stake in Scale AI in June, the biggest test of this business partnership's growth.
Unlike acquisitions that give control over the buyer, these transactions do not require review by US antitrust regulators. However, if you believe they are structured to avoid these requirements or to infringe competition, they can look into the deal. Since then, many of the transactions have been subject to regulatory investigations.
The development, as a tech giant that includes the alphabet and meta, is actively chasing famous acquisitions and offering a multi-million-dollar wage package to attract top talent in the race and lead the next wave of AI.
Windsurf's business director Jeff Wang will be appointed interim CEO and Graham Moreno, vice president of Global Sales, will soon be enforced.
Most of Windsurf's approximately 250 employees remain in the company. This announced plans to prioritize innovation for corporate clients.
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