Windsurf's wild weekend: after failed OpenAI deal, Google hires key talent, and Cognition acquires the company

In an unexpected turn of events, the AI coding startup Windsurf experienced a very dramatic weekend, which started when the exclusivity period on OpenAI's acquisition offer expired, and ended with the startup being acquired by Cognition, the company behind the viral AI coding agent Devin, right after Google made an offer to hire Windsurf's CEO, co-founder and top talent, and non-exclusively license the startup's technology.

As previously reported, OpenAI's negotiations to acquire Windsurf quickly became a point of conflict with Microsoft: the companies' current arrangement entitles Microsoft to unrestricted access to OpenAI's technology and intellectual property. OpenAI allegedly did not want Microsoft to access Windsurf's intellectual property, as it could undoubtedly prove beneficial to Microsoft's GitHub Copilot. Although it is not certain, this conflict could have led to OpenAI failing to take advantage of the exclusivity period of its deal with Windsurf.

Mere hours after the deal was no longer exclusive, Google swooped in with a $2.4 billion deal aimed at hiring away CEO Varun Mohan, co-founder Douglas Chen, and key researchers from Windsurf's team. Google did not take a stake in the startup, nor does it have any control over it. However, the negotiations also included a non-exclusive licensing agreement that enables Google to incorporate Windsurf's technology into its existing products, while also allowing the startup to license its technology to any interested parties.

"The last 72 hours have been the wildest rollercoaster ride of my career," said Jeff Wang, Windsurf's former head of business who briefly became interim CEO after the Google exodus.

Cognition's acquisition brings together two complementary approaches to AI coding: Windsurf's AI-powered integrated development environment (IDE) and Devin's autonomous coding agent capabilities. The deal gives Cognition access to Windsurf's $82 million ARR business and "hundreds of thousands" of daily active users while ensuring all remaining employees receive financial participation, unlike in the deal with Google, which reportedly excluded many of the most recent Windsurf employees.

For the time being, the Windsurf team will continue operating as usual, just as the Cognition team will remain focused on Devin. Crucially, Cognition's announcement remarked that the Windsurf IDE is now operating with full access to the Claude models, as Anthropic temporarily withdrew its models from the platform after hearing about the potential deal with rival OpenAI.