Google Joins AI Talent War With $2.4 Billion Windsurf Deal

Google has recruited Varun Mohan, the co-founder and CEO of artificial intelligence (AI) coding startup Windsurf, along with a substantial portion of his research and development team. This strategic move, valued at an estimated $2.4 billion in licensing and compensation over several years, marks a considerable victory for Google DeepMind and a notable setback for OpenAI, which had reportedly been in advanced talks to acquire Windsurf for a higher sum of $3 billion.

Google Acquires AI Talent in a $2.4 Billion Deal

What makes this deal particularly intriguing is that Google is not acquiring Windsurf outright or taking an equity stake in the company. Instead, it’s a strategic “acquihire” combined with a non-exclusive licensing agreement for some of Windsurf’s intellectual property. This arrangement allows Windsurf to remain independent and continue licensing its cutting-edge AI coding technology to other firms, while Google gains direct access to the talent and expertise that will significantly advance its Gemini project, particularly in the domain of “agentic coding” – AI tools designed to act more like autonomous software development collaborators.

Google Outwitted OpenAI to Acquire Windsurf

The collapse of OpenAI’s acquisition bid for Windsurf reportedly stemmed from concerns about the ChatGPT parent’s existing agreement with Microsoft, which grants the software giant extensive access to its technology. Windsurf leaders were hesitant to share their proprietary AI coding technology with Microsoft, a direct competitor in the space with its GitHub Copilot product. This opened the door for Google to step in with a more streamlined offer.

Mark Zuckerberg Has Been on an AI Talent Hiring Spree

Meta Platforms and its CEO, Mark Zuckerberg, have also been on an AI talent hiring spree, and last month the company acquired a 49% stake in Scale AI for approximately $14.3 billion. This deal, valuing the startup at over $29 billion, is Meta’s second-largest financial commitment after its WhatsApp acquisition and is a clear indicator of Mark Zuckerberg’s aggressive push to bolster Meta’s AI capabilities.

Meta has also hired Daniel Gross, co-founder and former CEO of Safe Superintelligence. His expertise in building AI products from the ground up will be instrumental in translating cutting-edge research into tangible user experiences. The company has poached key AI talent from tech giants like OpenAI, Google, and Apple as Zuckerberg doubles down on the company’s bets in artificial intelligence.

Most recently, Meta Platforms has announced the acquisition of PlayAI, a specialized voice-focused AI startup. This move, confirmed by an internal memo reviewed by Bloomberg, will see the entire PlayAI team joining Meta next week, reporting to Johan Schalkwyk, a recent Meta hire who also has a strong background in voice AI from his time at Sesame AI Inc

Apple Was Also Rumoured to be Interested in Perplexity

Last month, some reports suggested that Apple executives internally discussed acquiring AI startup Perplexity. The reports come at a time when Apple stock has been underperforming its tech peers amid concerns that it has slackened on its efforts in artificial intelligence.

The discussions were reportedly at an early stage, and so far, Apple hasn’t made a bid to Perplexity’s management. Perplexity, known for its conversational AI search tools that provide summarized information from the web, recently closed a funding round valuing it at $14 billion. An acquisition at this price would be Apple’s largest ever, surpassing its $3 billion purchase of Beats in 2014.

Apple is reportedly seeking to enhance its capabilities in AI-driven search and potentially reduce its reliance on Google’s search engine, which currently generates an estimated $20 billion annually for default placement in Safari. The ongoing US antitrust lawsuit against Google’s search dominance could be another motivation behind Apple’s consideration of acquiring Perplexity.

Analysts Believe Apple Slackened in AI

Meanwhile, Apple is currently facing a shareholder class action lawsuit that alleges that the iPhone maker overhyped its progress in artificial intelligence and misled investors about the timeline for integrating advanced AI features into its Siri assistant.

Shareholders argue that at its June 2024 Worldwide Developers Conference (WWDC), Apple led them to believe that AI, particularly “Apple Intelligence” features designed to enhance Siri, would be a key driver for iPhone 16 devices and would be ready for launch. However, the lawsuit claims Apple lacked a functional prototype of these AI-based Siri features and had no reasonable basis to believe they would be ready for the iPhone 16.

OpenAI Acquired io Products.

OpenAI recently acquired io Products, the startup company of Jony Ive, who is credited with designing several Apple products, including the iPhone. The io Products team joining OpenAI includes other former Apple design heavyweights like Scott Cannon, Evans Hankey (Ive’s successor as Apple’s head of hardware design), and Tang Tan, signaling a significant transfer of top-tier industrial design talent. This influx of expertise positions OpenAI to compete directly in the burgeoning AI hardware market, challenging established players like Apple, Google, and Meta, who are also pouring resources into AI-powered devices.

The Battle for AI Talent

The AI revolution is in full swing, and at its heart lies a fierce, increasingly aggressive “talent war” for the brightest minds. As artificial intelligence rapidly transitions from a specialized research field to the core driver of innovation for every major tech company and countless startups, the demand for skilled engineers, researchers, and developers has far outstripped supply, leading to unprecedented compensation, strategic poaching, and a fundamental reshaping of the tech employment landscape.

This isn’t just about filling job vacancies; it’s a high-stakes battle for the future. The company that secures and retains the most cutting-edge AI talent is widely believed to be the one that will dominate the next era of technology, from superintelligent systems and advanced robotics to entirely new product categories.

After ploughing billions of dollars into building AI models, tech companies now seem engaged in the battle to hire top-quality AI talent. These are still early days, but having the right set of talent could turn out to be the differentiator as tech giants try to establish themselves as pre-eminent AI plays.