The news: Google snatched AI coding startup Windsurf’s IP out from under OpenAI in an acqui-hire that includes the company's CEO, co-founder, and some R&D employees.

• Google will pay $2.4 billion for a nonexclusive license to Windsurf’s technology and “multiple years” of compensation for the employees being brought on, per The Information.
• Google’s stake in the company avoids going as far as a merger or acquisition, a move pulled from the playbooks of Amazon and Microsoft regarding Anthropic and OpenAI, respectively.

This talent grab comes as companies like Meta and OpenAI battle to recruit and retain AI-skilled workers.

Goodbye, OpenAI: This puts an end to OpenAI’s plan to purchase Windsurf for about $3 billion. That deal could have attracted more regulatory scrutiny and was stirring up conflict between Microsoft and OpenAI.

• OpenAI wanted to exclude the deal from the revenue- and IP-sharing agreement that gives Microsoft rights to OpenAI’s IP through 2030, per The Information.
• Including the acquisition in the partnership could have helped Microsoft improve GitHub Copilot, potentially raising antitrust red flags and complicating OpenAI’s strategy.

What will Google gain? Windsurf gives Google access to powerful automated coding tools to streamline and accelerate software engineering and development. CEO Sundar Pichai said in April that AI generates more than 30% of new code for Google’s products.

Google could also strengthen its own AI coding product, Gemini Code Assist, to boost adoption.

Our take: Google’s nonexclusive licensing approach could help it avoid regulatory pushback, though employees not involved in the deal may be left out to dry.

Deals like this show that control over developer tools is becoming a major strategic advantage for tech companies and could indicate that the Big Tech fight for AI talent and executives is only just beginning.