A surprising twist has disrupted what seemed like a done deal between OpenAI and Windsurf. Initially valued at $3 billion, the partnership has reportedly collapsed, largely due to Microsoft’s intervention. According to Bloomberg, the tech giant, which holds a major stake in OpenAI, stepped in and halted the agreement. Here’s what happened.
Microsoft Puts the Brakes on Windsurf Acquisition
Insiders familiar with the negotiations revealed that Microsoft denied Windsurf access to certain intellectual property tied to its collaboration with OpenAI. The refusal clashed with the cooperative framework already in place between OpenAI and Microsoft, which allows for mutual sharing of technologies.
When the exclusivity window for the deal expired, Windsurf was free to seek other opportunities—and it didn’t take long.
Google Steps In, Snaps Up Talent
Rather than pursuing full ownership of the startup, Google took a different approach. It recruited key members of the Windsurf team, including CEO Varun Mohan and co-founder Douglas Chen. Both are now joining Google DeepMind, the company’s leading division in advanced machine learning.
In addition, Google secured non-exclusive rights to Windsurf’s technology stack. This allows the startup to continue offering its tools and services to other players in the industry, not just Google.
A Sign of Strain Between Microsoft and OpenAI?
This incident adds to growing signs of friction between Microsoft and OpenAI. The tech giant from Redmond is beginning to look more like a controlling partner than a supportive backer. If the situation continues down this path, Microsoft may soon face a tough decision: either take full control of OpenAI or walk away and build something new.
Creating a homegrown alternative isn’t so simple, though. Developing a platform to rival what Sam Altman and his team have built would require enormous investment and time. One possible path for Microsoft? Acquire a different rising player like Anthropic or Mistral to secure its position in the AI race.
