Windsurf wipeout, OpenAI syas $3bn, Satya says NO

Welcome to AI Collision 💥,

In today’s collision between AI and our world:

• A $3 billion deal.
• No, not a $3 billion deal. A $2.4 billion deal.
• Wait, there’s still some left over?

If that’s enough to get the spending on talent accelerating, read on…

AI Collision 💥

Windsurf was one of those rare startups that didn’t need hype to feel important (or be worth it). It just worked from the outset and was growing revenues hand over fist.

It was an all-in-one coding platform built with AI at its core, not bolted on from some other third party. It’s faster than GitHub Copilot, cleaner than VS Code. It was a fast favourite of developers who once they tried it often didn’t go back to whatever it was they were using before. It wasn’t just writing code faster and more efficiently — it was building a smarter way to build in the digital world.

It got a lot of attention, no more so than from OpenAI. And behind the scenes there were rumours it was something that OpenAi was very interested is sweeping up.

Those quiet talks turned into a deal. $3 billion worth of a deal to be precise. Sam Altman was involved directly. The plan was simple, plug Windsurf into GPT-5, make it the main workspace for coding, and give OpenAI its own full-stack developer suite.

A full operating system for software creation, it would fight off the hype building around Grok’s coding capabilities, and OpenAI might stick its neck in front again in the AI race.

That is… until Microsoft and Satya Nadella learnt what was going down.

When they found out about this potential takeover, they called the deal off.

Microsoft said no.

It’s easy to forget, but OpenAI doesn’t get to move freely as you might think they do. Microsoft has invested over $13 billion, and that comes with strings.

Satya Nadella didn’t like the deal. Windsurf was too close to Copilot. Too polished, too good, too competitive. If OpenAI bought it, they’d be backing a rival to Microsoft’s own developer tools. And Satya wasn’t about to let that happen. So he stepped in and killed it.

Just like that, the deal was dead. OpenAI was caught off guard. Windsurf’s founders were furious. And Google was lurking…

This week, Google scooped up the heart and soul of Windsurf. Quite literally.

You thought Mark Zuckerberg was spending up big on AI talent… well, Google just spent $2.4 billion in a stock and incentives deal on Windsurf CEO Varun Mohan and co-founder Douglas Chen, along with select research and development staff, for its DeepMind AI division.

Microsoft didn’t want a competitor to CoPilot, arguably a better version of CoPilot developer tools, so Google said, well ‘ave that then.

It’s one of the most dramatic deals and reversals we’ve seen to date in the rush to snaffle up the world’s best AI builders.

But the story doesn’t end with Google…

While Google took the founders and some key staff, Congition (a company building an AI agent, Devin, that can code software on its own) aquired all the rest of Windsurf from under everyone else’s noses.

That’s around 250 people, from engineers and designers to product executives — all now working out of Cognition’s Palo Alto HQ.

It’s an ironic twist. Windsurf was built to make humans more productive. Now that same team is helping build the tool that may one day replace them.

This kind of three-way tug-of-war used to play out over products. Now it happens for talent. OpenAI, Google, and Cognition didn’t just compete for market share — they competed for people. For talent, ideas, for results.

And when $3 billion offers fall apart and $2.4 billion worth of “hires” happen overnight… and then more again is spent on the scraps, you can’t help but see what’s really going on here.

The AI boom isn’t slowing down. It’s speeding up. Deals are bigger, faster, messier. The stakes are enormous. One great team with the right product can set off a chain reaction that pulls in three of the most powerful players in tech and reshapes the direction of AI and the AI talent market overnight.

Follow the money, and it seems, follow the people and you’ll quickly see who maybe ends up as winners in this AI race.

#AD

Eccentric AI Scientist Releases Shocking Video 

He’s one of the original pioneers of artificial intelligence — and even worked on IBM’s Deep Blue before it famously beat Garry Kasparov at chess. 

What he says in this strange video has ruffled a lot of feathers in the tech world — because it calls out the flawed assumptions about how AI actually works — assumptions that could have serious consequences for society. 

Capital at risk 

Boomers & Busters 💰

AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).

Boom 📈

• AMD (NASDAQ:AMD) up 15%
• AeroVironment (NASDAQ:AVAV) up 13%
• Alibaba Group (NYSE:BABA) up 11%

Bust 📉

• Micron (NASDAQ:MU) down 4%
• Meta (NASDAQ:META) down 4%
• Intel (NASDAQ:INTC) down 3%

From the hive mind 🧠

• Speaking of Google, they managed to use AI to help them detect and override a massive exploit. Thanks to AI that never sleeps!
• I wrote about this at length over at Investor’s Daily (you can check out my take on it all here) but clearly “Ani” is getting a lot of attention, for all the wrong reasons.
• There’s a lot of talk that companies other than Google are working furiously on new AI enabled search. But don’t quite write off the big dog just yet.

Artificial Polltelligence 🗳️

Today’s poll is more related to my essay over at Investor’s Daily about “Ani” the new AI companion availble through Grok. Maybe go read that piece first before answering this…

Weirdest AI image of the day

ChatGPT’s random quote of the day

Thanks for reading, and don’t forget to leave comments and questions below,

Sam Volkering

Editor-in-Chief

AI Collision