In Silicon Valley, drama moves fast, especially in AI.
Just three days after Google announced it was spending $2.4 billion to poach the core team from AI startup Windsurf, Cognition AI surprised everyone by acquiring all of Windsurf’s remaining assets. The final twist was startling, even for Silicon Valley.
The Real Timeline of the Windsurf Drama
April 2025: OpenAI’s Acquisition Hits a Roadblock
OpenAI was negotiating a roughly $3 billion acquisition of Windsurf, aiming to boost its AI coding capabilities. But talks stalled due to Windsurf’s worries about intellectual property conflicts with Microsoft, one of OpenAI’s major investors and a direct competitor through its Copilot product.
June 2025: Anthropic Cuts Off Access, Windsurf Isolated
Anthropic, concerned by rumors that OpenAI might acquire Windsurf, abruptly cut Windsurf’s direct access to its Claude AI models. This left Windsurf isolated and significantly disrupted their tech resources.
July 11, 2025: Google Moves Swiftly, but Doesn't Acquire the Company
The moment OpenAI’s exclusivity period ended, Google swooped in with a $2.4 billion deal — not to buy Windsurf, but to hire CEO Varun Mohan, co-founder Douglas Chen, and key R&D personnel. They joined Google DeepMind’s Gemini project. Google also secured a non-exclusive license for Windsurf’s technology but notably didn’t take any equity.
July 14, 2025: Cognition AI Acquires Remaining Assets in a Flash
After Google took the leadership team, Windsurf’s 200-plus remaining employees and assets were left in limbo. Cognition AI acted quickly, acquiring Windsurf’s remaining intellectual property, products, brand, and business operations. They promised strong financial protections for all employees, including accelerated vesting.
Throughout the weekend after Google's announcement, Windsurf’s remaining executives urgently worked with Cognition to finalize the acquisition terms. Although several companies had shown interest, Cognition’s deal was by far the most employee-friendly.
Why Are Tech Giants Suddenly Investing Billions for Talent?
This rapid-fire acquisition saga reveals something deeper. Silicon Valley giants aren’t just chasing cutting-edge technology—they’re fighting fiercely over talent and strategic influence in AI. As AI matures, the competition shifts from basic products to control over core technology and top talent.
Interestingly, major players are increasingly adopting investment-based acquisition models. These deals, designed as strategic investments rather than outright acquisitions, potentially sidestep antitrust scrutiny.
For example:
- In June this year, Meta invested $14.3 billion in Scale AI, securing top executives and data resources.
- Google invested $3 billion in Character AI last year.
- Amazon similarly invested in Adept roughly a year ago.
The trend raises questions: Are these new deal structures merely clever legal maneuvers to dodge regulatory concerns, or are they genuinely protecting employees’ interests?
AI competition is far from over, and finding the right balance between regulation and innovation will remain critical.
A Peek Inside Cognition AI's Internal Email
After completing the acquisition, Cognition AI CEO Scott Wu wrote in an internal email:
"As you all know, we’ve had strong momentum and adoption over the last few months. For many enterprise engineering teams, Devin is already a top contributor. As our customer base continues to grow, it’s clear that combining the rapid adoption of Devin as the leading fully autonomous agent with Windsurf’s IDE product and scaled GTM machine will be a massive unlock."
“To that end, Jeff and I worked together to ensure that every single employee is treated with respect and well taken care of in this transaction. Specifically:
- 100% of Windsurf employees will participate financially in this deal
- 100% of Windsurf employees will have vesting cliffs waived for their work to date
- 100% of Windsurf employees will receive fully accelerated vesting for their work to date”
The AI battle has just begun.
Which AI company do you think tech giants will target next?
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