Alphabet Reportedly Strikes $2.4B Licensing Deal With Windsurf, Snags Founders And AI Researchers After OpenAI's Failed Bid

Alphabet, Inc. (GOOGL) (GOOG) has reportedly struck a $2.4 billion licensing deal with Windsurf, shortly after OpenAI’s deal to buy the artificial intelligence (AI) coding startup fell through.

Windsurf confirmed on Friday it had entered into an agreement that will kick-start the next phase. As part of the deal, Windsurf CEO and co-founder Varun Mohan, fellow co-founder Douglas Chen, and some members of its R&D team will join Google. 

“Most of Windsurf’s world-class team will continue to build the Windsurf product for the enterprise and enable our customers to maximize the outcomes from adopting this technology,” the startup said.

Jeff Wang, Windsurf’s Head of Business, has stepped into the role of interim CEO.

Alphabet stock has lagged the Magnificent Seven group, down over 4% even as the broader market traded up over 6%.

On Stocktwits, retail sentiment toward Alphabet stock has improved to ‘extremely bullish’ (78/100) from the ‘neutral’ mood seen a week ago. The message volume was at a ‘high’ level.

A bullish watcher deemed the stock as “undervalued” and said, “hold forever, and chill.”

Another user called it a “momentum play” and expected the stock to gap up this week.

Alphabet’s deal, reported by media outlets, will be a non-exclusive agreement to license specific Windsurf technology. “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 an Alphabet spokesperson, according to CNBC.

“Big welcome to @_mohansolo and others from the Windsurf team joining Deepmind,” said Logan Kilpatrick, the group product manager at Google Deepmind.

Mountain View, California-based WindSurf, formerly called Codeium, was co-founded by Mohan and Chen. According to Tracxn data, WindSurf has raised over $243 million in funding over two rounds, with contributions coming from private-equity firms, including General Catalyst and Kleiner Perkins. 

OpenAI's unsuccessful WindSurf bid followed opposition from Microsoft due to the AI coding company’s reluctance to share its intellectual property with the software giant, Bloomberg reported, citing people familiar with the matter. 

The development underlines the ongoing cut-throat moves among megacap tech companies to gain AI supremacy. 

Meta has reportedly bought conversational AI startup PlayAI after taking a minority stake worth about $14 billion in Scale AI and hiring its CEO, Alexander Wang. The Mark Zuckerberg-led company has also been vigorously poaching AI talent, primarily from OpenAI.

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