OpenAI Nears $3 Billion Acquisition of Windsurf, AI-Powered Coding Tool

By Netvora Tech News

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OpenAI is reportedly on the cusp of making its largest public acquisition to date, with a deal to purchase Windsurf, a software developer tool powered by large language models (LLMs), for a whopping $3 billion. The agreement was first revealed by Bloomberg, which cited sources familiar with the matter.

Rumors of such a deal have been swirling for weeks, but now it appears to be a done deal. Windsurf CEO and co-founder Varun Mohan took to X last night to announce that a "big announcement" would be coming the next day, May 6, 2025. The acquisition is expected to be finalized as early as today.

The deal is aimed at helping OpenAI take on rising competition in the market for AI-driven coding assistants, which can perform tasks such as writing code based on natural language prompting. Windsurf, which was founded in 2021 by MIT graduates Varun Mohan and Douglas Chen, had been in talks with venture capital firms to raise another round of private investment at a valuation of around $3 billion, up from $1.25 billion last year.

The startup, formerly known as Exafunction and later Codeium, initially developed a "security-focused LLM toolkit that provides intelligent code suggestions in the context of the codebase," according to VentureBeat. Windsurf's technology uses large language models to provide developers with AI-powered code suggestions and tools.

What's Next for Windsurf's Support and Offerings?

One of the biggest questions surrounding the acquisition is what will happen to Windsurf's support and offerings of non-OpenAI LLMs. Will OpenAI continue to support these models, or will they be phased out in favor of OpenAI's own LLM technology?

A Usage and Data Play to Bolster OpenAI's Models?

Another potential angle is that the acquisition is a usage and data play meant to bolster OpenAI's models against competitors in the coding space. By integrating Windsurf's technology and data into its own platform, OpenAI may be able to improve the performance and accuracy of its AI-driven coding assistants, giving it a competitive edge in the market.