OpenAI’s $3 billion deal to acquire viral AI coding startup Windsurf collapsed Friday, according to The Verge.
Instead, Google DeepMind stepped in. It’s hiring Windsurf CEO Varun Mohan, co-founder Douglas Chen, and top researchers.
A Google spokesperson told TechCrunch: 
“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.
Google is not buying Windsurf or taking a stake. It scored a nonexclusive license to some Windsurf tech. Windsurf remains free to license its tools to others.
This is a reverse-acquihire: Google hires the talent, licenses tech, but leaves Windsurf independent. Similar moves helped Big Tech skirt regulatory scrutiny. Google did it with Character.AI’s CEO, Microsoft with Mustafa Suleyman.
Mohan and Chen responded to TechCrunch:
“We are excited to be joining Google DeepMind along with some of the Windsurf team,”
they said.
“We are proud of what Windsurf has built over the last four years and are excited to see it move forward with their world class team and kick-start the next phase.”
Windsurf’s head of business, Jeff Wang, is interim CEO, announced on X. Most of Windsurf’s 250 employees stay put, serving enterprise customers.
Logan Kilpatrick of Google tweeted:
OpenAI’s failed acquisition was a sticking point in its contract talks with Microsoft, The Wall Street Journal reported. Microsoft, OpenAI’s biggest backer, didn’t want Windsurf’s AI coding tech in its hands too.
Fortune said the exclusivity on OpenAI’s offer expired Friday, freeing Windsurf to explore other bidders — it didn’t waste time.
Windsurf’s explosive growth caught eyes. Its ARR jumped to about $100 million in April from $40 million months earlier, TechCrunch reported.
Adding Mohan and Chen could boost Google’s AI coding push. Anthropic and OpenAI have been racing with their AI coding tools Claude Code and Codex.
Windsurf, left without its top leaders, faces uncertainty. Other startups hit by reverse-acquihires, like Scale AI and Inflection, struggled. Windsurf might follow suit.
