Google pays $2.4 billion in licensing fees to AI startup Windsurf and hires key executives to boost DeepMind’s agentic coding projects amid growing AI competition.
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| Google’s $2.4B licensing deal with Windsurf includes hiring key execs to fuel DeepMind’s agentic coding push, bypassing acquisition and intensifying AI competition. Image: CH |
Mountain View, USA — July 12, 2025:
In a high-stakes play to advance artificial intelligence dominance, Google has hired top leadership and engineers from AI code-generation startup Windsurf, in a $2.4 billion licensing deal aimed at strengthening DeepMind’s capabilities in agentic coding. The agreement, announced Friday, comes just weeks after OpenAI's failed bid to acquire the startup.
Under the terms, Google will pay $2.4 billion for non-exclusive licensing rights to Windsurf’s cutting-edge technologies. The tech giant will not acquire an equity stake or controlling interest in the company, allowing Windsurf to retain its independence while benefitting from a massive capital influx. The move mirrors a growing trend among tech giants to secure strategic assets without triggering antitrust scrutiny.
Joining Google’s DeepMind division are Windsurf CEO Varun Mohan, co-founder Douglas Chen, and several core members of its research and development team. Their focus will be on advancing Google’s agentic coding initiatives, including projects under the Gemini program—designed to develop AI systems that can autonomously generate and manage complex codebases.
“We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” Google said in a statement. The company sees agentic coding as a cornerstone in the next phase of AI development, enabling systems to write, test, and maintain code with minimal human input.
The deal marks a significant win for Windsurf’s investors, including Kleiner Perkins, Greenoaks, and General Catalyst, who will receive liquidity from the license fee while retaining their stakes. According to PitchBook, Windsurf had raised $243 million and was last valued at $1.25 billion in mid-2024.
The startup, now under new leadership, has appointed Jeff Wang as interim CEO and Graham Moreno as president. Most of Windsurf’s 250 employees will remain with the company, which plans to sharpen its focus on enterprise-grade AI innovation for its existing clients.
Google’s maneuver echoes a pattern of “acquihire” deals across Silicon Valley. Microsoft inked a $650 million deal with Inflection AI earlier this year that involved licensing tech and absorbing staff. Amazon hired co-founders of Adept, and Meta recently acquired a 49% stake in Scale AI—deals structured to acquire talent and technology without formal mergers.
Such partnerships, while effective, have begun to attract the attention of U.S. regulators, who are assessing whether they sidestep merger review processes or distort fair competition in the rapidly evolving AI market.
With Windsurf’s leadership now embedded at DeepMind and the firm’s intellectual assets licensed, Google has added yet another high-value building block in the race to dominate agentic and generative AI. The move reaffirms Alphabet’s strategy to lead the next frontier of artificial intelligence by rapidly integrating elite talent and breakthrough technologies—without the regulatory hurdles of a traditional acquisition.