In a week that saw a fast-changing series of moves between tech companies, one startup’s collapse turned into another’s opportunity.
July 20, 2025: : Windsurf, a well-known code automation firm, was on the brink of being acquired by OpenAI in a $3 billion deal. But when that agreement unraveled, the company quickly became the subject of competing interests. Google stepped in, hiring CEO Varun Mohan and several of his senior team members while also paying $2.4 billion to license Windsurf’s technology.
Now, the remaining parts of Windsurf, including its product, brand, customer relationships, and some staff, have been picked up by San Francisco-based software company Cognition. The financial terms of the transaction were not disclosed.
While Cognition didn’t acquire the entire company, it now owns Windsurf’s technology and business assets. That includes access to over 350 enterprise customers and a user base reported to include hundreds of thousands of active developers. Windsurf had been generating $82 million in recurring revenue annually, according to Cognition’s announcement, and had seen its enterprise contracts double quarter-over-quarter.
The staff joining Cognition includes those not brought over to Google. Cognition has said this group will continue developing the technology under its roof.
Founded in late 2023, Cognition develops software tools that help engineers write and manage code. The company has raised nearly $200 million to date, according to data from Crunchbase. Its backers include Khosla Ventures, Pear VC, South Park Commons, and Founders Fund, which was also an investor in Windsurf.
From OpenAI to Cognition: Windsurf’s Startup Saga
For OpenAI, the failed deal marks a shift in what was expected to be its largest acquisition. The company had reportedly been in discussions to acquire Windsurf after earlier talks with another coding platform, Anysphere, fell through.
The competition between companies for technology talent and developer platforms has become increasingly active. Google’s licensing approach, paired with targeted hiring, suggests it was less interested in buying Windsurf outright and more focused on integrating its people and tools internally.
The Windsurf sale also highlights a changing trend in how mergers and acquisitions are playing out in the technology sector. While large corporations like Google and Nvidia remain active buyers, newer software firms, such as Cognition , are beginning to act as buyers themselves, using recent funding rounds to expand their portfolios.
With coding platforms now considered a valuable entry point for business software integration, acquisitions like this one may become more common.
