OpenAI’s $3 billion deal with AI coding startup Windsurf collapses, as Google swoops in for licensing deal

Google has struck a licensing deal with coding startup Windsurf, upending OpenAI’s $3 billion offer to acquire the startup after the clock on the deal’s exclusivity period expired, according to a source with direct knowledge of the matter.

The deal with Google means that Windsurf will continue to operate as an independent startup, the source said. An OpenAI spokesperson confirmed to Fortune that the exclusivity period for the $3 billion deal that the companies entered into two months ago had expired.

Google and Windsurf could not immediately be reached for comment.

AI coding startups, which use generative AI to assist programmers in writing code, have become one of the hottest categories in tech. Microsoft’s GitHub Copilot, built on OpenAI’s technology, has gained widespread adoption. In addition, Cursor, a startup backed by VCs like Thrive Capital, Accel, and Andreessen Horowitz, recently raised a $900 million Series C, hitting a $9 billion valuation.

Prior to making its bid for Windsurf, OpenAI had approached Anysphere about acquiring Cursor—but these discussions fell through as the startup wasn’t interested in being bought “even by OpenAI,” according to a report in TechCrunch.

Founded in 2021 by MIT classmates, and initially called Codeium, the startup changed its name to Windsurf in April, shortly before the OpenAI offer. The startup’s investors include Founders Fund, General Catalyst, Greenoaks, and Kleiner Perkins. TechCrunch reported in February that Windsurf was raising a funding round at a $2.85 billion valuation.

This story was originally featured on Fortune.com