Google recruits Windsurf executives in $2.4 billion agreement to boost AI programming goals.

Google has announced the hiring of several essential personnel from AI code generation startup Windsurf, a surprising development after its competitor OpenAI’s attempt to acquire the startup.

According to a source familiar with the agreement, Google is paying $2.4 billion in licensing fees to utilize certain technologies from Windsurf on a non-exclusive basis. Google will not acquire a stake or any controlling share in Windsurf, the individual noted. Windsurf’s CEO Varun Mohan, co-founder Douglas Chen, and certain members of the coding tool’s R&D team will become part of Google’s DeepMind AI division.

The agreement came after several months of negotiations Windsurf was engaged in with OpenAI to sell itself in a transaction that could appraise it at $3 billion, illustrating the demand in the code-generation sector that has surfaced as one of the rapidly expanding AI applications, sources acquainted with the situation in June.

The previous Windsurf team will concentrate on agentic coding projects at Google DeepMind, mainly engaging with the Gemini initiative. The distinctive deal arrangement represents a victory for Windsurf’s supporters, which has secured $243 million from investors such as Kleiner Perkins, Greenoaks, and General Catalyst, and was last appraised at $1.25 billion a year prior, according to PitchBook.

Sources informed that windsurf investors will gain liquidity via the license fee while keeping their stakes in the company.

Google’s recent hire of key employees from chatbot startup Character.AI aligns with a trend among Big Tech firms like Microsoft, Amazon, and Meta, utilizing acquihire deals to sidestep regulatory scrutiny.

Microsoft’s $650 million deal with Inflection AI and Amazon’s acquisition of Adept co-founders exemplify this approach. Although these arrangements avoid direct antitrust reviews, regulators may still investigate if competition is threatened. Windsurf appointed Jeff Wang as interim CEO and retains most of its 250 employees, focusing on innovation.