OpenAI in Negotiations to Acquire Programming Tool Windsurf for $3 Billion

OpenAI is reportedly negotiating to acquire Windsurf, an AI-driven programming tool, for approximately $3 billion, according to two informed sources.

This acquisition could potentially draw in thousands of new customers from the tech sector, as it swiftly embraces tools like Windsurf, which enables instant code generation.

Should the deal go through, it would represent OpenAI’s largest acquisition to date, aiming to broaden its offerings beyond its well-known chatbot ChatGPT. Last year, OpenAI acquired Rockset, a startup aimed at assisting businesses in constructing the foundational elements of large-scale computer networks.

Windsurf, previously recognized as Codeum, was valued at $1.25 billion following a $150 million funding round led by the venture capital firm General Catalyst last year.

The agreement is not finalized yet, as the two anonymous sources indicated. Initial reports of discussions have surfaced previously on Bloomberg.

OpenAI currently offers technology that enables users to create their own code. In fact, Windsurf utilizes OpenAI technology or similar systems from firms like Google and Anthropic for code generation.

About four years ago, researchers from companies such as OpenAI and Google started developing systems to analyze extensive text data sourced from the Internet, including digital books, Wikipedia articles, and chat logs. By recognizing patterns within this content, these systems can generate text, including poetry and news articles.

What surprised many was that researchers were able to create their own programming code. Currently, developers use these systems to produce code and integrate it into large software projects with tools like Windsurf and Microsoft’s Copilot.

(Times has filed a lawsuit against OpenAI and its partner Microsoft, accusing them of copyright violation regarding AI Systems news content. Both OpenAI and Microsoft have denied these allegations.)

Developing technologies that enhance coding tools is incredibly costly for companies such as OpenAI, and startups face pressure to generate revenue.

OpenAI anticipates earning around $3.7 billion this year, according to financial documents reviewed by The New York Times. The company expects revenues to reach $11.6 billion next year.

In March, OpenAI concluded a $40 billion funding round, which valued the company at $300 billion, making it one of the most valuable private enterprises globally, alongside prominent players like TikTok parent company ByteDance and SpaceX. This funding round was led by Japan’s SoftBank.

However, scrutiny is placed on this transaction as OpenAI plans to revise its complex corporate structure, and failure to accomplish this by year-end could allow SoftBank to reduce its overall investment to $20 billion.