OpenAI → Windsurf

A $3bn agreement to buy the AI coding-assistant company that lapsed in July 2025 amid a dispute over whether Microsoft, as OpenAI's partner, would gain access to Windsurf's code; Google then paid about $2.4bn for the founders and a licence, and Cognition bought what remained.

Lapsed in July 2025 amid a dispute over Microsoft's access to the code; Google then paid about $2.4bn for the founders and a licence, and Cognition bought the rest.

Value

$3B

Announced

May 2025

Outcome

Terminated

Sector

AI

Deal type

acquisition

Acquirer

OpenAI (United States)

Target

Windsurf (United States)

Why it mattered

Coding was the first market in which AI agents earned real revenue, and the labs wanted to own the editor developers wrote in rather than sell tokens to it: Anthropic had Claude Code, Google had its own tools, and OpenAI agreed to buy Windsurf, whose Codeium plugin and editor had several hundred thousand users. The deal foundered on OpenAI's own partnership terms with Microsoft, which gave Microsoft rights to OpenAI's intellectual property and which, Windsurf and its backers apparently concluded, would extend to the acquired code — a conflict with GitHub Copilot that neither side would accept.

What happened next was the 2024–25 pattern executed twice in a weekend: Google hired Windsurf's chief executive, co-founder and senior researchers for its DeepMind coding effort under a non-exclusive licence worth about $2.4bn, and Cognition, maker of the Devin coding agent, bought the remaining company — product, staff and customers — days later for far less.

What it left behind

A worked example of what the licence-and-hire structure does to a company: the founders and the investors were paid, the remaining staff were sold to a second buyer, and the product changed hands twice in a week. It also showed the limits of OpenAI's freedom to acquire under its Microsoft agreement, a constraint that shaped the renegotiation of that partnership later in 2025.