Hey followers! Today we dive into the surprising turn of events in the AI world, featuring Windsurf, OpenAI, and Google.

Windsurf’s planned $3 billion acquisition by OpenAI recently collapsed, according to The Verge. In a surprising twist, Google DeepMind is now actively recruiting Windsurf’s top executives and researchers. Google confirmed this move, emphasizing that they are not acquiring Windsurf, but are licensing some of its technology while hiring key talent.

This reverse deal is part of a trend where big tech firms hire startup leaders and license technology instead of outright buying companies. Google previously made similar arrangements, such as with Character.AI’s CEO Noam Shazeer and Microsoft with Mustafa Suleyman, helping them expand their AI capabilities without regulatory complications.

Windsurf’s CEO Varun Mohan and co-founder Douglas Chen are joining Google DeepMind to advance their agentic coding projects. Windsurf’s team, now led by interim CEO Jeff Wang, mostly remains in place to continue serving enterprise customers. The deal allows Windsurf to license its tech to others and keeps its independence intact.

Meanwhile, the tension between OpenAI and its backer Microsoft seems to have influenced the deal’s failure, with OpenAI’s initial offer falling through after the exclusivity period expired. Windsurf has seen rapid growth, with its annual revenue surging from $40 million to about $100 million in just a few months, attracting attention from OpenAI and Google alike.

The addition of Windsurf’s top talent could give Google a significant boost in AI coding tools. However, less fortunate startups that lose their leaders, like Scale AI and Inflection, have struggled to maintain momentum post-departure. The situation paints a picture of a competitive AI ecosystem where talent and technology are highly valuable.