Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More
OpenAI appears to be on the verge of making its biggest public acquisition to date with an agreement reached to buy Windsurf, the software developer tool powered by large language models (LLMs), to the tune of $3 billion, according to Bloomberg (unpaywalled Yahoo reprint).
Rumors have swirled around such a deal for weeks, but now it appears to be happening as early as today, May 6, 2025, with Windsurf CEO and co-founder Varun Mohan posting on X last night: “Big announcement tomorrow!”
According to Bloomberg, the deal is meant to “help OpenAI take on rising competition in the market for AI-driven coding assistants — systems capable of tasks like writing code based on natural language prompting,” and Windsurf had been in talks with venture capital firms to raise another round of private investment around that $3 billion valuation, up from $1.25 billion last year.
The startup, formerly known as Exafunction and later Codeium, was founded in 2021 by MIT graduates Varun Mohan and Douglas Chen, initially as a “security-focused LLM toolkit that provides intelligent code suggestions in the context of the codebase,” as VentureBeat reported last year.
As it gained more users, its ambitions grew, culminating in the launch of the Windsurf Integrated Development Environment (IDE) in November 2024, a fork of Microsoft’s Visual Studio Code, and the renaming of the company after it. Windsurf reportedly now counts more than 800,000 developer users and 1,000 enterprises as customers.
It’s far from the only game in town when it comes to LLM-powered IDEs and dev tools, though: OpenAI was reportedly in talks to buy another very similar and rival startup, Cursor, and there’s of course Amazon’s Q Developer and GitHub Copilot as well. But all are shared in their opinion that LLMs and AI models are going to change software development for the foreseeable future, writing code in the blink of an eye that would take human developers minutes, hours, or days to do manually.
What will happen to Windsurf’s support and offering of non-OpenAI LLMs?
For users, the integration with OpenAI will undoubtedly raise questions.
Part of Windsurf’s appeal is that it is somewhat model agnostic, in that developers who use it can choose with LLM they want to help them write code.
Right now, it offers several large language model options for its chat interface, including a custom Windsurf Base Model that’s a fine-tuned variant of Meta’s Llama 3.1 70B, while the Premier Model is based on Meta’s larger Llama 3.1 405B and is integrated with Windsurf’s internal reasoning tools to support more complex tasks, particularly in coding.
Subscribers can also access external models such as OpenAI’s GPT-4o and Anthropic’s Claude 3.5 Sonnet, allowing for flexibility in model selection depending on the use case.
Will OpenAI seek to remove the option for users to select outside LLMs and restrict them to OpenAI’s model families such as GPT-4o, o3, o4, etc?
We’ll see, but I for one highly doubt it, given Windsurf’s business has succeeded in some part based on the flexibility of its tool offerings. It would also likely raise complaints of anti-competitive business measures and could even lead to some potential lawsuits.
A usage and data play meant to bolster OpenAI’s models against competitors in the coding space?
Instead, I would imagine that OpenAI is looking at the Windsurf acquisition as a means not only of acquiring a popular developer tool that plays well with its own models, but as a way to gather tons of user and usage data — and from this, it could see which types of developers use rival models such as the Meta Llama variants and Anthropic’s Claude, and for what purposes, and seek to ensure that new versions of OpenAI’s own LLMs are competitive on these fronts.
Either way, it’s a “big freakin deal” — to paraphrase former President Joe Biden — and it will undoubtedly have many far-reaching ripple effects throughout Windsurf’s entire userbase and the wider pool of developers and AI-powered dev tools.
Already, Windsurf’s Discord server is filled with posts from users bracing for the worst — an increase in prices or new access tiers bundling and limiting its usage to ChatGPT subscribers or OpenAI API developers.
We’ll be tracking and reporting what we uncover that’s useful for technical decision-makers. Stay tuned!
