Another significant development has occurred in the world of technology. Alphabet Inc., Google's parent company, has finalized a major deal with the artificial intelligence (AI) startup, Windsurf. The total value of this deal is approximately $2.4 billion, or around ₹20,000 crore. Google made this acquisition at a time when negotiations between Windsurf and OpenAI had broken down.
Windsurf's CEO, Varun Mohan, and co-founder Douglas Chen, along with other key members, will now become part of Google's AI unit, DeepMind. Under this deal, Google will benefit from Windsurf's AI technology and its core talent.
What was the real reason for the deal breaking down with OpenAI?
Windsurf was initially planning to close a deal with OpenAI for approximately $3 billion. Negotiations regarding this deal had progressed significantly, and preparations for its announcement were underway for early May 2025. A letter of intent had been signed between the two companies, and Windsurf's investors had also been provided with information regarding the financial terms.
However, a major obstacle emerged in the form of Microsoft. Microsoft is OpenAI's primary investor and has an agreement with OpenAI that grants it access to OpenAI's technology. Windsurf was unwilling to provide its AI technology to Microsoft. Due to this, OpenAI was unable to obtain Microsoft's consent, and the negotiations stalled.
According to a Bloomberg report, OpenAI itself confirmed on Friday that the period of exclusive talks with Windsurf had concluded. This meant that Windsurf could now pursue deals with other companies.
Google acted swiftly and secured a deal with Windsurf
As soon as the negotiations with OpenAI collapsed, Google acted quickly and finalized a new agreement with Windsurf. However, this is not a direct takeover deal. In this deal, Google has included some of Windsurf's top executives in its AI unit, DeepMind, and has also acquired the licensing rights to their AI technology.
Deals of this nature are not termed "acquisitions," but they have a similar impact. By integrating Windsurf's CEO Varun Mohan and co-founder Douglas Chen, Google has once again demonstrated that it will not be left behind in the AI race.
What does Windsurf create and why is it so special?
Windsurf, officially registered as Exafunction Inc., is an AI startup that specializes in developing coding assistants. These are tools that can understand natural language instructions provided by humans and automatically generate code. Essentially, they are AI-powered coding systems that simplify the work of programmers.
The startup was founded in 2021 and has raised $200 million (around ₹1,700 crore) in funding to date. Several major venture capital firms have invested in it, and its focus has been entirely on AI-driven solutions.
The race to advance in AI intensifies
Companies like Google, Microsoft, Amazon, and Meta are making every effort to stay ahead in the AI space. For this, these companies are not only developing new tools but also targeting small and innovative startups that possess unique ideas and outstanding talent.
Google's new deal is considered a significant step in this direction. By bringing a company like Windsurf into its network, Google is not only gaining a technological advantage but also strengthening its position in the world of AI.
New avenues are opening up for AI startups
The story of Windsurf also demonstrates that new avenues are opening up for AI startups, not just in terms of investment but also in terms of joining forces with large companies. On the one hand, these startups get an opportunity to utilize their technology and talent on large platforms, while on the other hand, tech giants get a chance to accelerate their AI capabilities.
