OpenAI's planned $3 billion acquisition of AI coding startup Windsurf collapsed after the startup raised concerns about how it would fit into OpenAI's intellectual property arrangement with Microsoft. Following the breakdown of the deal, Google DeepMind hired Windsurf's CEO Varun Mohan, co-founder Douglas Chen, and key research and development team members. Google secured a non-exclusive license to some of Windsurf's technology and agreed to pay approximately $2.4 billion in licensing fees. Windsurf will continue to operate independently with most of its 250 employees remaining, led by new CEO Jeff Wang. Shortly after, enterprise software startup Cognition AI, known for its AI coding agent Devin, signed a definitive agreement to acquire the remaining parts of Windsurf, including its intellectual property, product, trademark, brand, and workforce. Cognition's acquisition values Windsurf at approximately $82 million and includes financial participation and accelerated vesting for all Windsurf employees. This sequence of events highlights a trend among technology giants to hire top AI talent and license technology rather than completing full acquisitions, allowing for faster integration and avoiding lengthy merger reviews. The deals have implications for Windsurf's early investors, including Greenoaks Capital Partners, General Catalyst, and Kleiner Perkins, the latter expecting around three times its investment from the licensing arrangement with Google.