10 ms·

Why is OpenAI buying Windsurf?

241 points by theahura 2y ago

soared 2y ago
I’ve switched off of chatGPT for general use from a kind of moral/ethical standpoint. All the competitors are effectively the same for easy research questions, so I might as well use a vendor who’s not potentially a scumbag.
- dangus 2y ago
  Which vendor isn't a run scumbag or owned by a scumbag?
  - trollbridge 2y ago
    I’ve been using Grok (for free), so in theory I’m getting a vendor to spend money on me.
    - asadotzler 2y ago
      >Which vendor isn't a run scumbag or owned by a scumbag? >>I’ve been using Grok The biggest scumbag of them all, but hey "I use it for free."
    - dangus 2y ago
      But they can count you as a user and that positively impacts their valuation.
      - nativeit 2y ago
        One of the many inverted incentives in this space, considering every user Grok counts is actively burning through their cash.
    - nsonha 2y ago
      Grok one of the two big brands of model associated with a social network? They're not qualified to even be considered.
      - trollbridge 1y ago
        Grok works fine for generating images, summarising documentation etc., and surprisingly most stuff is now easily usable on the free tier.
- AndrewKemendo 2y ago
  Which one did you move to? I haven’t found as good of an turnkey chat/search/gen interface as CGPT yet unfortunately. Even self hosted deepseek on an Ada machine doesn’t get there cause the open source interfaces are still bad
  - soared 2y ago
    Gemini primarily - but I’m using it for help with house projects, landscaping, shopping, etc and not for coding. Not not a scumbag owner but feels better than OpenAI.
    - itwillnotbeasy 2y ago
      Weird choice, given Google’s track record on privacy. Gemini uses your chats for training and human review them by default. You can opt out by turning off App Activity, but that disables chat history and integrations, which kinda kinda makes it useless. Claude respects your privacy by default and ChatGPT and Grok have an opt-out that doesn’t totally cripple the app. So what makes Google less scummy? A cheaper price? I’m sure that won’t last long – they’ve played this game before with YouTube, Google Reader, and Search: hook users, dominate, then enshittify. Same old Google playbook: good → monopoly → crap.
torben-friis 2y ago
>Some are better at the auto complete (Copilot), others at the agent flow (Claude Code). Some aim to be the best for non-technical people (Bolt or Replit), others for large enterprises (again, Copilot). Still, all of this "differentiation" ends up making a 1-2% difference in product. In fact, I can't stress enough how much the UX and core functionality of these tools is essentially identical. Is this exclusively referring to the ux or full functionality? Because I can tell you straight away that cursor (Claude) vs copilot is not a 1% difference. Most people in my company pay their own cursor license even though we have copilot for available for free.
- tyleo 2y ago
  Agreed, I’ve used both at work and personal projects. Copilot auto complete is great but it isn’t ground breaking. Cursor has built near entire features for me. I think copilot could get there TBH. I love most Microsoft dev tools and IDEs. But it really isn’t there yet in my opinion.
- theahura 2y ago
  Can you say more? I was referring to UX, as that is the main product. Cursor isn't providing their own models, or at least most people that I'm aware of are bringing their own keys. I haven't used copilot extensively but my understanding is that they now have feature parity at the IDE level, but the underlying models aren't as good.
  - rfoo 2y ago
    > Cursor isn't providing their own models For use cases demanding the most intelligent model, yes they aren't. However, there are cases that you just can't use best models due to latency. For example next edit prediction, and applying diffs [0] generated by the super intelligent model you decided to use. AFAIK, Cursor does use their own model for these, which is why you can't use Cursor without paying them $20/mo even if you bring your own Anthropic API key. Applying what Claude generated in Copilot is just so painfully slow to the point that I just don't want to use it. If you tried Cursor early on, I recommend you update your prior now. Cursor had been redesigned about a year ago, and it is a completely different product compared to what they first released 2 years ago. [0] We may not need a model to apply diff soon, as Aider leaderboard shows, recent models started to be able to generate perfect diff that actually applies.
dstroot 2y ago
Currently using Claude code and Cursor, but VSCode is copying Cursor rapidly. Not sure if the VSCode forks will survive. Ideally we’d have VSCode with a robust agent capability and a fully open “bring your own LLM” feature.
- danny_codes 2y ago
  Never used cursor but this seems like easy pickings. Code already has extensions that do exactly this.
  - nsonha 2y ago
    Cursor was way, way better than Copilot before agent mode, which has just been released this month. Not to mention it has have MCP for quite awhile before Copilot.
phillipcarter 2y ago
To me it's fairly straightforward. OpenAI is predominantly a consumer AI company. Anthropic has also won over developer hearts and minds since Claude 3.5. Developers are also, proportionally, the largest uses of AI in an enterprise setting. OpenAI does not want to be pigeonholed into being the "ChatGPT company". And money spent now is a lot cheaper than money spent later. But this is all just speculation anyways.
captn3m0 2y ago
> The worst case scenario for Apple is they decide to use user data late. Given how heavily Apple has leaned into E2E over the years, I don't see this happening at all, beyond local on-device stuff.
AndrewKemendo 2y ago
I was really liking windsurf but need to look for another option now unfortunately. It’s a shame we can’t have anything nice not get consumed but - such is the world.
- uxcolumbo 2y ago
  Same here. I doubt they'll keep the option of letting me choose what model to use. Can't trust OpenAI.
  - deleted 2y ago
    [deleted]
- sexy_seedbox 2y ago
  RooCode
  - AndrewKemendo 2y ago
    Thanks that looks promising
g8oz 2y ago
Reminds me of Snowflake purchasing Streamlit. A sign of a big wallet and slowing internal execution on the part of the purchaser rather than an indication of the compelling nature of the acquisition.
- ramraj07 2y ago
  800 million for streamlit is still the most mind-blowing acquisition story I've heard. Codeium being a few bill sounds reasonable for that.
- mosdl 2y ago
  The snowflake marketplace was/is such a mess. I always wondered what caused them to choose streamlit.
candiddevmike 2y ago
I predict we will hit peak vibe coding by this summer. The tooling can't be sold at a loss forever/costs will go up for all sorts of reasons, and I think the tech debt generated by the tooling will eventually be recognized by management as velocity/error quotas start to inverse. I don't think self-driving developers will happen in time, and another AI winter will settle in with the upcoming recession.
- apples_oranges 2y ago
  IMHO: we will vibe:code with free local/cheaply hosted open source models and IDEs.. the hardware to facilitate is coming to consumers fast. But if Microsoft can sell Office to companies for decades then open ai can surely do the same for coding tools
  - sebzim4500 2y ago
    Unless there is a massive change in archiecture, it will always be much more cost effective to have a single cluster of GPUs running inference for many users than have each user have hardware capable of running SOTA models but only using it for the 1% of the time where they have asked the model to do something.
  - exitb 2y ago
    There are multiple orders of magnitude between the sizes of models people use for „vibe coding” and models most people can comfortably run. It will take many years to bridge that gap.
  - nativeit 2y ago
    > But if Microsoft can sell Office to companies for decades then open ai can surely do the same for coding tools This seems like a bold statement.
- ToValueFunfetti 2y ago
  I've seen a lot of AI hype, but "AI will make management recognize that tech debt is important" takes the cake. Maybe in 2040
dangus 2y ago
> I've always been a staunch defender of capitalism and free markets, even though that's historically been an unpopular opinion in my particular social circle. Watching the LLM market, I can't help but feel extremely vindicated. Over the last 5 years, the cost per token has been driven down relentlessly even as model quality has skyrocketed. The brutal and bruising competition between the tech giants has left nothing but riches for the average consumer. There's a rich irony to be saying this right after explaining how Google is dominating the market and how they're involved in an antitrust lawsuit for alleged illegal monopolistic practices. And of course this willfully ignores the phase of capitalism we are in with the AI market right now. We all know how the story will end. Over time, AI companies will inevitably merge and the products will eventually enshittify. As companies like OpenAI look to exit they will go public or be acquired and need to greatly trim the fat in order to become profitable long-term. We'll start seeing AI products incorporate things like advertising, raise their prices, and every other negative end state we've seen with every other new technology landscape. E.g., When I get a ride from Uber they literally display ads to me while I'm waiting for my vehicle. They didn't do that when they were okay with losing moeny. And of course, "free market" capitalism isn't really free market at all in an enviornment where there are random tariffs being applied and removed on a whim to random countries. I really don't understand why people feel like they need to defend capitalism like this. Capitalism doesn’t need a defender, if anything it constantly needs people restraining it.
- deleted 2y ago
  [deleted]
- probably_wrong 2y ago
  I had a similar thought when I reached the part about Apple. A system that punishes the player respects their user's privacy while rewarding those that take everything that isn't nailed down is not a good system. The author frames Apple's choice as an own goal, but I'd rather see it as putting the failings of capitalism on display.
firesteelrain 2y ago
Windsurf/Codeium has an enterprise version that can be used by corporations to provide AI assisted coding environments using their own HW stack (non cloud). This is beneficial for privacy and proprietary reasons especially if your data cannot be exfiltrated off premises. The hardware recommended to run Codeium is a lot cheaper than if you were to have 700 developers generate tokens. This model has the chance to generate many paying customers. Whether that has a $40b market cap is unclear
- theahura 2y ago
  Thanks, I had a feeling it may be something like this since it seemed like they were investing more in enterprise. That said, do they do better than copilot on this? Surely msft has more experience and ability to execute in that market?
  - rfoo 2y ago
    Codeium's completion model is better than whatever GitHub Copilot has. For me it's Cursor > Codeium >>> Copilot. Yes, Copilot is that bad. And yes Codeium/Windsurf focuses on enterprise customers more. As GP said they have an on-prem [0], a hybrid SaaS offering and enterprise features that just make sense (e.g. pooled credits). Their support team is more responsive (compared to Anysphere). Windsurf also "feels" more finished than Cursor. [0] but ultimately if you want to "vibe-coding" you have to call Claude API
    - theahura 2y ago
      Ok thanks, that was my follow-up -- I assumed that airgap implementations are significantly worse because they can't back into Claude or Gemini
  - firesteelrain 2y ago
    It’s a Copilot competitor and it’s used by Zillow, Dell, and Anduril (newish Defense company). Cursor can’t work in airgapped environments right now. I don’t know what Codeium charges to run an on prem licensed version but they boast over 1000 enterprise customers. Codeium is on a rapid growth trajectory from $1.25b to $2.85b in such a short period. Codeium can be fine tuned. Though it’s trained on similar open source it does provide assurances that they do not inadvertently train on wrongly licensed software code. https://windsurf.com/blog/copilot-trains-on-gpl-codeium-does-not https://windsurf.com/blog/copilot-trains-on-gpl-codeium-does...
apples_oranges 2y ago
Isn’t the usual reason the people that work there?
_jab 2y ago
A few thoughts: 1) I agree that the moat for these companies is thin. AFAICT, auto-complete, as opposed to agentic flows, is Cursor's primary feature that attracts users. This is probably harder than the author gives it credit for; figuring out what context to provide the model is a non-obvious problem - how do you tradeoff latency and model quality? Nonetheless, it's been implemented enough times that it's mostly just down to how good is the underlying model. 2) Speaking of models, I'm not sure it's been independently benchmarked yet, but GPT 4.1 on the surface looks like a reasonable contestant to back auto-complete functionality. Varun from Windsurf was even on the GPT 4.1 announcement livestream a few days ago, so it's clear Windsurf does intend to use them. 3) This is probably a stock deal, not a cash deal. Not sure why the author is so convinced this has to be $3B in cash paid for Windsurf. AFAIK that hasn't been reported anywhere. 4) If agentic flows do take off, data becomes a more meaningful moat. Having a platform like Cursor or Windsurf enables these companies to collect telemetry about _how_ users are coding that isn't possible just from looking at the repo, the finished product. It opens up interesting opportunities for RLHF and other methods to refine agentic flows. That could be part of the appeal here.
- theahura 2y ago
  I mention in the footnotes that this is likely a stock deal! I didn't think about telemetry for RL, that's very interesting
- imtringued 2y ago
  If it's a stock deal that's even worse, since OpenAI is saying that their stock is definitely worth less than $3 billion.
- Falimonda 2y ago
  Agentic flows will soon overtake auto-complete. Models like claude sonnet 3.5 were already good enough, albeit requiring the user to actively limit context length. Most recently, gemini 2.5 pro makes the agentic workflow usable, and how!
  - canadiantim 2y ago
elicksaur 2y ago
>OpenAI has also announced a social media project I haven’t heard about this before this post, but if they’re starting a “Social Media but with AI” site in 2025, can’t help but feel like they’re cooked.
seaourfreed 2y ago
I think the defensible business models in AI are up-the-stack. Windsurf category is one example. There are more. AI will lead to far bigger work accomplished than one prompt or chat at a time. Bigger work flows on humans upgrading and interacting with AI will be a big critical category for that.
croes 2y ago
Can’t be for the software because they claim AI can do it too, so $3B should be more than enough to write it from scratch.
WA 2y ago
Ironically, 3 billion is proof that these tools do not work as expected and won’t replace coders in the near future. Otherwise, why spend 3 billion if you could have it cooked up by an AI coding agent for (almost) free?
- JambalayaJimbo 2y ago
  Existing customer base?
  - arczyx 2y ago
    OpenAI has way more users and brand recognition than Windsurf. If they decide to make their own code editor and marketed it, I'm pretty sure its customer base will surpass Windsurf's relatively quickly.
whippymopp 2y ago
if you look closely at the communications coming out of windsurf, I think it’s pretty obvious that the deal is not happening.
- dagorenouf 2y ago
  where did you see this?
  - whippymopp 2y ago
    check the windsurf subreddit. the official reps have repeatedly said it’s pure speculation
    - rvz 2y ago
      >pure speculation Or called plausible deniability. They will always deny these reports. At the end of the day, Windsurf has a private price tag which they know they will sell at. If they were smart, they should consider selling the hype.
    - disgruntledphd2 2y ago
      They have to say that, even if the deal is real. They might not even have been told.
    - TiredOfLife 2y ago
      Google Stadia team were saying they are not shuting down minutes before they were shut down.
ramoz 2y ago
It’s a vehicle that can hit the enterprise, broad user base, training data, and gain coverage of a competitor market (I’m sure the primary LLM in windsurf is Claude just like it is in cursor). Beyond that, these IDEs have a potential path to “vibe coding for everyone” and could possibly represent the next generation of general office tooling. Might as well start with a dedicated product team vs spinning up a new one.
xnx 2y ago
The $3B number is largely and a marketing move to show what a big/real/important company OpenAI is. I hope Windsurf got some real money out of the deal too. If ChatGPT disappeared tomorrow, people would just move to the next model.
consumer451 2y ago
For anyone interested, here is an interview with Windsurf CEO and co-founder, Varun Mohan. It was released today. Not sure if it covers the potential acquisition, though I imagine not. https://www.youtube.com/watch?v=5Z0RCxDZdrE https://www.youtube.com/watch?v=5Z0RCxDZdrE
- theahura 2y ago
  Thanks for sharing, super interesting!
mrcwinn 2y ago
This is poor analysis. It claims OpenAI is spending “3 of its 40” billion in raised capital on Windsurf. Who said this was an all cash deal? And so if you’re purchasing with equity in whole or in part, the critical question is, do you believe this product could be worth more than $3b in the future? That’s not at all a stretch. Cursor is awfully cozy with Anthropic, as well, and so if I’m OpenAI, I don’t mind having a competitive product inserted into this space. This space, by the way, that is at the forefront of demonstrating real value creation atop your platform.
- theahura 2y ago
  (I mention in the footnotes that this is likely a stock deal!)
jchonphoenix 2y ago
My guess is the telemetry data. OAI spends gobs of money on Mercor and Windsurf telemetry gets them similar data. My guess is they saw their Mercor spend hitting close to 1B a year in the next 5 years if they did nothing to curb it
rvz 2y ago
Because Cursor got too greedy. Before approaching Windsurf, OpenAI wanted to buy Cursor (which is what I predicted thought too [0]) first, then the talks failed twice! [1] The fact they approached Cursor more than once tells you they REALLY wanted to buyout Cursor. But Cursor wanted more and were raising over $10B. Instead OpenAI went to Windsurf. The team at Windsurf should think carefully and they should sell because of the extreme competition, overvaluation and the current AI hype cycle. Both Windsurf and Cursor’s revenue can evaporate very quickly. Don’t get greedy like Cursor. [0] https://news.ycombinator.com/item?id=43708867 https://news.ycombinator.com/item?id=43708867 [1] https://techcrunch.com/2025/04/17/openai-pursued-cursor-maker-before-entering-into-talks-to-buy-windsurf-for-3b/ https://techcrunch.com/2025/04/17/openai-pursued-cursor-make...
bionhoward 2y ago
To take your codebase and make you dependent
dang 2y ago
Recent and related: OpenAI looked at buying Cursor creator before turning to Windsurf - https://news.ycombinator.com/item?id=43716856 https://news.ycombinator.com/item?id=43716856 - April 2025 (115 comments) OpenAI in Talks to Buy Windsurf for About $3B - https://news.ycombinator.com/item?id=43708725 https://news.ycombinator.com/item?id=43708725 - April 2025 (44 comments)
stevenjgarner 2y ago
The article opines "though it makes me wonder just how bad OpenAI's relationship with Microsoft has gotten if they no longer have access to GitHub". Is their relationship known to be souring?
- stevenjgarner 2y ago
  Just learned that 'Sam Altman says OpenAI is no longer "compute-constrained" — after Microsoft lost its exclusive cloud provider status': https://news.ycombinator.com/item?id=43711688 https://news.ycombinator.com/item?id=43711688
OxfordOutlander 2y ago
It is a talent and a distribution play. Talent: obvious. Distribution: OpenAI believes the marginal token they sell will be accretive to their bottom line, so the goal then is to deliver as many tokens as possible. Windsurf already has 1k+ enterprise logos and allegedly millions of downloads. 2 m tokens × $0.00001 gross / token = $20/seat/mo; if windsrf runs 500k seats, oai books $120 m/yr gross @ 90% margin. I saw a similar dynamic play out in the UK with Pub (bar) companies. By mid-2000s, the major players were failing. Margins were nearly zero, thanks to rising costs, and securlar decline in demand, plus they had too much expensive term debt. But they represented profitable sources of distribution for the beer makers. So Heineken went on a buying spree. They didn't care about making money from the pubs themselves and were happy to run them break-even. This is because they then had a controlled channel of distribution for their beer (and they made a profit on every pint they shipped). The switching costs are very different here, and the market is still so nascent. It is a thin product and vscode‑copilot can catchup. But 1% of enterprise value ($3bn of $300bn) is not a lot to gamble on owning the #2 horse in the most promising AI end market today.
- benjaminwootton 2y ago
  What’s the net margin? Is anyone making money on inference yet?
- theahura 2y ago
  I mention distribution in the post, and reasons to be skeptical of that as the primary driver (though I agree that may be the case) Re talent, I'm not sure how big windsurf is, but aren't these teams generally quite small? $3b for a small team still seems quite high, especially since (afaik) their core area of expertise is more in UX and product than in ml research. That's not to say that UX and product aren't worth acquiring, just that the price tag is surprising if that's the primary justification.
  - OxfordOutlander 2y ago
    Given Sam recently said he thinks consumer is going to be the valuable path, perhaps it is not too much to pay for a great ux/product team "Ben Thompson: What’s going to be more valuable in five years? A 1-billion daily active user destination site that doesn’t have to do customer acquisition, or the state-of-the-art model? Sam Altman: The 1-billion user site I think."
goopthink 2y ago
Why couldn’t OpenAI vibe code their own Windsurf/Cursor competitor? (Serious question). OpenAI is a technology company constantly in search of productization (ChatGPT, Sora, Dall-e), and they’ve been really good at creating product interest that converts to acquisition. An IDE is much more complex than a chat app, but given their literal billions of dollars and familiarity with developer tooling, this is a down-stack build that they could dogfood off their own tech. And especially given that some of these tools were built by tiny teams (Cursor is what, 10 people?), is this like Google and Facebook’s implicit admission that they can’t “build and grow” anymore, and need to turn to acquisitions to fuel growth?
- 1zael 2y ago
  They are just too focused on more important problems to solve, primarily around model improvement and getting to AGI.
- echan00 2y ago
  They could. They prob need talent though, considering how much fish they're frying
- ivanbalepin 2y ago
  it still takes time to spec out, build and sell to a comparable size user base, even with 10 people. And you're not guaranteed the same results if you just try to clone all of that. If the price is right, why not take the shortcut.
  - goopthink 2y ago
    Is $3 billion the right price? That might be what Windsurf is being valued at (cue the “selling to willing buyers at currently fair market prices” meme), but that’s like saying “it would cost OpenAI more than $3b to staff from zero, build a competitor, and acquire a comparable volume of paying users” … and that feels like an insane statement given the implications therein? Especially given that Windsurf (and I think Cursor too) is a VSCode fork and OpenAI is cozy enough with Microsoft? It’s not even a zero to one build.
yumraj 2y ago
Prediction: OpenAI will buy Windsurf and then make it free with one of the cheaper OpenAI plans, effectively trying to kill the other IDEs and getting access to data which helps it compete/better against Claude and Gemini. Google needs to launch its equivalent, and Anthropic needs to figure out their plan.
- gman83 2y ago
  Google already did: https://firebase.studio/ https://firebase.studio/
  - yumraj 2y ago
    Not apples to apples, isn’t Firebase studio tied to Firebace, and not general purpose development? TBH, I didn’t look deeper since I made the above assumption based on the name.
    - gman83 2y ago
      No, it's just a rebranded version of Project IDX, their cloud-based VS Code fork. No need to use Firebase, that's just the branding.
      - yumraj 2y ago
        will take a look, thx.
memset 2y ago
Not stated in the article - and doesn’t necessarily e explain the price tag - but windsurf if simply better than cursor or Claude code. Otherwise people wouldn’t be switching to it.
cheriot 2y ago
Coding assistants are likely to be a major profit source in the near term. It's useful today and the customers (ie employers) are willing to pay for productivity. Only the beginning of the enterprise spending more on AI than consumers. When it's time to stop giving away dollars for pennies, everyone will want to be in the enterprise. The article rightly points out that OAI is not cost effective for code right now. I imagine they will optimize for the use case now.
deleted 2y ago
[deleted]
JumpCrisscross 2y ago
“it's not yet clear OpenAI actually has $40bn to spend” Do we have confirmation it was a cash transaction?
tagalog 2y ago
OpenAI probably has 3 main reasons 1. Opportunity cost of shifting their team to work on a cursor/ firebase studio/ windsurf clone while they are locked into a model arms race might be worth much more than $3 billion if risk losing supremacy 2. They get a million users day one of the deal getting done and instantly own the team + the number 2 best IDE which gives them a massive boost over all their other model competitors like Google and Anthropic. Personally, I still think we are early enough that building makes more sense, so reason 1 still feels the strongest. 3. You get the dedicated windsurf team that can focus 100% on this product while your main model teams can keep cranking
- machiaweliczny 2y ago
  IMO people underestimate effort of hiring people with domain expertise for this. Maybe they can try to buy one person from these teams and then have it help build the core IDE team but this will take much longer than just buying a very strong team.
revskill 2y ago
They should build ide using their ai. Lol they are jst bullshit generators.
parsabg 2y ago
> Windsurf is providing OpenAI access to data? There's certainly some possibility that this is the case — though it makes me wonder just how bad OpenAI's relationship with Microsoft has gotten if they no longer have access to GitHub This is missing an important nuance. The valuable data generated through coding copilots isn't the code, but the step by step human-AI interaction to produce the code. Windsurf and Cursor are effectively crowdsourced data annotation farms which give their owners an edge in providing better coding models. I think this is way more important than talent or software in this deal.
farhantawfeeq56 1y ago
Because even vibe coding is hard

241 points by theahura 2y ago

I’ve switched off of chatGPT for general use from a kind of moral/ethical standpoint. All the competitors are effectively the same for easy research questions, so I might as well use a vendor who’s not potentially a scumbag.

dangus 2y ago
Which vendor isn't a run scumbag or owned by a scumbag?
- trollbridge 2y ago
  I’ve been using Grok (for free), so in theory I’m getting a vendor to spend money on me.
  - asadotzler 2y ago
    >Which vendor isn't a run scumbag or owned by a scumbag? >>I’ve been using Grok The biggest scumbag of them all, but hey "I use it for free."
  - dangus 2y ago
    But they can count you as a user and that positively impacts their valuation.
    - nativeit 2y ago
      One of the many inverted incentives in this space, considering every user Grok counts is actively burning through their cash.
  - nsonha 2y ago
    Grok one of the two big brands of model associated with a social network? They're not qualified to even be considered.
    - trollbridge 1y ago
      Grok works fine for generating images, summarising documentation etc., and surprisingly most stuff is now easily usable on the free tier.
AndrewKemendo 2y ago
Which one did you move to? I haven’t found as good of an turnkey chat/search/gen interface as CGPT yet unfortunately. Even self hosted deepseek on an Ada machine doesn’t get there cause the open source interfaces are still bad
- soared 2y ago
  Gemini primarily - but I’m using it for help with house projects, landscaping, shopping, etc and not for coding. Not not a scumbag owner but feels better than OpenAI.
  - itwillnotbeasy 2y ago
    Weird choice, given Google’s track record on privacy. Gemini uses your chats for training and human review them by default. You can opt out by turning off App Activity, but that disables chat history and integrations, which kinda kinda makes it useless. Claude respects your privacy by default and ChatGPT and Grok have an opt-out that doesn’t totally cripple the app. So what makes Google less scummy? A cheaper price? I’m sure that won’t last long – they’ve played this game before with YouTube, Google Reader, and Search: hook users, dominate, then enshittify. Same old Google playbook: good → monopoly → crap.

torben-friis 2y ago

>Some are better at the auto complete (Copilot), others at the agent flow (Claude Code). Some aim to be the best for non-technical people (Bolt or Replit), others for large enterprises (again, Copilot). Still, all of this "differentiation" ends up making a 1-2% difference in product. In fact, I can't stress enough how much the UX and core functionality of these tools is essentially identical. Is this exclusively referring to the ux or full functionality? Because I can tell you straight away that cursor (Claude) vs copilot is not a 1% difference. Most people in my company pay their own cursor license even though we have copilot for available for free.

tyleo 2y ago
Agreed, I’ve used both at work and personal projects. Copilot auto complete is great but it isn’t ground breaking. Cursor has built near entire features for me. I think copilot could get there TBH. I love most Microsoft dev tools and IDEs. But it really isn’t there yet in my opinion.
theahura 2y ago
Can you say more? I was referring to UX, as that is the main product. Cursor isn't providing their own models, or at least most people that I'm aware of are bringing their own keys. I haven't used copilot extensively but my understanding is that they now have feature parity at the IDE level, but the underlying models aren't as good.
- rfoo 2y ago
  > Cursor isn't providing their own models For use cases demanding the most intelligent model, yes they aren't. However, there are cases that you just can't use best models due to latency. For example next edit prediction, and applying diffs [0] generated by the super intelligent model you decided to use. AFAIK, Cursor does use their own model for these, which is why you can't use Cursor without paying them $20/mo even if you bring your own Anthropic API key. Applying what Claude generated in Copilot is just so painfully slow to the point that I just don't want to use it. If you tried Cursor early on, I recommend you update your prior now. Cursor had been redesigned about a year ago, and it is a completely different product compared to what they first released 2 years ago. [0] We may not need a model to apply diff soon, as Aider leaderboard shows, recent models started to be able to generate perfect diff that actually applies.

dstroot 2y ago

Currently using Claude code and Cursor, but VSCode is copying Cursor rapidly. Not sure if the VSCode forks will survive. Ideally we’d have VSCode with a robust agent capability and a fully open “bring your own LLM” feature.

danny_codes 2y ago
Never used cursor but this seems like easy pickings. Code already has extensions that do exactly this.
- nsonha 2y ago
  Cursor was way, way better than Copilot before agent mode, which has just been released this month. Not to mention it has have MCP for quite awhile before Copilot.

phillipcarter 2y ago

To me it's fairly straightforward. OpenAI is predominantly a consumer AI company. Anthropic has also won over developer hearts and minds since Claude 3.5. Developers are also, proportionally, the largest uses of AI in an enterprise setting. OpenAI does not want to be pigeonholed into being the "ChatGPT company". And money spent now is a lot cheaper than money spent later. But this is all just speculation anyways.

captn3m0 2y ago

> The worst case scenario for Apple is they decide to use user data late. Given how heavily Apple has leaned into E2E over the years, I don't see this happening at all, beyond local on-device stuff.

AndrewKemendo 2y ago

I was really liking windsurf but need to look for another option now unfortunately. It’s a shame we can’t have anything nice not get consumed but - such is the world.

uxcolumbo 2y ago
Same here. I doubt they'll keep the option of letting me choose what model to use. Can't trust OpenAI.
- deleted 2y ago
  [deleted]
sexy_seedbox 2y ago
RooCode
- AndrewKemendo 2y ago
  Thanks that looks promising

g8oz 2y ago

Reminds me of Snowflake purchasing Streamlit. A sign of a big wallet and slowing internal execution on the part of the purchaser rather than an indication of the compelling nature of the acquisition.

ramraj07 2y ago
800 million for streamlit is still the most mind-blowing acquisition story I've heard. Codeium being a few bill sounds reasonable for that.
mosdl 2y ago
The snowflake marketplace was/is such a mess. I always wondered what caused them to choose streamlit.

candiddevmike 2y ago

I predict we will hit peak vibe coding by this summer. The tooling can't be sold at a loss forever/costs will go up for all sorts of reasons, and I think the tech debt generated by the tooling will eventually be recognized by management as velocity/error quotas start to inverse. I don't think self-driving developers will happen in time, and another AI winter will settle in with the upcoming recession.

apples_oranges 2y ago
IMHO: we will vibe:code with free local/cheaply hosted open source models and IDEs.. the hardware to facilitate is coming to consumers fast. But if Microsoft can sell Office to companies for decades then open ai can surely do the same for coding tools
- sebzim4500 2y ago
  Unless there is a massive change in archiecture, it will always be much more cost effective to have a single cluster of GPUs running inference for many users than have each user have hardware capable of running SOTA models but only using it for the 1% of the time where they have asked the model to do something.
- exitb 2y ago
  There are multiple orders of magnitude between the sizes of models people use for „vibe coding” and models most people can comfortably run. It will take many years to bridge that gap.
- nativeit 2y ago
  > But if Microsoft can sell Office to companies for decades then open ai can surely do the same for coding tools This seems like a bold statement.
ToValueFunfetti 2y ago
I've seen a lot of AI hype, but "AI will make management recognize that tech debt is important" takes the cake. Maybe in 2040

dangus 2y ago

> I've always been a staunch defender of capitalism and free markets, even though that's historically been an unpopular opinion in my particular social circle. Watching the LLM market, I can't help but feel extremely vindicated. Over the last 5 years, the cost per token has been driven down relentlessly even as model quality has skyrocketed. The brutal and bruising competition between the tech giants has left nothing but riches for the average consumer. There's a rich irony to be saying this right after explaining how Google is dominating the market and how they're involved in an antitrust lawsuit for alleged illegal monopolistic practices. And of course this willfully ignores the phase of capitalism we are in with the AI market right now. We all know how the story will end. Over time, AI companies will inevitably merge and the products will eventually enshittify. As companies like OpenAI look to exit they will go public or be acquired and need to greatly trim the fat in order to become profitable long-term. We'll start seeing AI products incorporate things like advertising, raise their prices, and every other negative end state we've seen with every other new technology landscape. E.g., When I get a ride from Uber they literally display ads to me while I'm waiting for my vehicle. They didn't do that when they were okay with losing moeny. And of course, "free market" capitalism isn't really free market at all in an enviornment where there are random tariffs being applied and removed on a whim to random countries. I really don't understand why people feel like they need to defend capitalism like this. Capitalism doesn’t need a defender, if anything it constantly needs people restraining it.

deleted 2y ago
[deleted]
probably_wrong 2y ago
I had a similar thought when I reached the part about Apple. A system that punishes the player respects their user's privacy while rewarding those that take everything that isn't nailed down is not a good system. The author frames Apple's choice as an own goal, but I'd rather see it as putting the failings of capitalism on display.

firesteelrain 2y ago

Windsurf/Codeium has an enterprise version that can be used by corporations to provide AI assisted coding environments using their own HW stack (non cloud). This is beneficial for privacy and proprietary reasons especially if your data cannot be exfiltrated off premises. The hardware recommended to run Codeium is a lot cheaper than if you were to have 700 developers generate tokens. This model has the chance to generate many paying customers. Whether that has a $40b market cap is unclear

theahura 2y ago
Thanks, I had a feeling it may be something like this since it seemed like they were investing more in enterprise. That said, do they do better than copilot on this? Surely msft has more experience and ability to execute in that market?
- rfoo 2y ago
  Codeium's completion model is better than whatever GitHub Copilot has. For me it's Cursor > Codeium >>> Copilot. Yes, Copilot is that bad. And yes Codeium/Windsurf focuses on enterprise customers more. As GP said they have an on-prem [0], a hybrid SaaS offering and enterprise features that just make sense (e.g. pooled credits). Their support team is more responsive (compared to Anysphere). Windsurf also "feels" more finished than Cursor. [0] but ultimately if you want to "vibe-coding" you have to call Claude API
  - theahura 2y ago
    Ok thanks, that was my follow-up -- I assumed that airgap implementations are significantly worse because they can't back into Claude or Gemini
- firesteelrain 2y ago
  It’s a Copilot competitor and it’s used by Zillow, Dell, and Anduril (newish Defense company). Cursor can’t work in airgapped environments right now. I don’t know what Codeium charges to run an on prem licensed version but they boast over 1000 enterprise customers. Codeium is on a rapid growth trajectory from $1.25b to $2.85b in such a short period. Codeium can be fine tuned. Though it’s trained on similar open source it does provide assurances that they do not inadvertently train on wrongly licensed software code. https://windsurf.com/blog/copilot-trains-on-gpl-codeium-does-not https://windsurf.com/blog/copilot-trains-on-gpl-codeium-does...

apples_oranges 2y ago

Isn’t the usual reason the people that work there?

_jab 2y ago

A few thoughts: 1) I agree that the moat for these companies is thin. AFAICT, auto-complete, as opposed to agentic flows, is Cursor's primary feature that attracts users. This is probably harder than the author gives it credit for; figuring out what context to provide the model is a non-obvious problem - how do you tradeoff latency and model quality? Nonetheless, it's been implemented enough times that it's mostly just down to how good is the underlying model. 2) Speaking of models, I'm not sure it's been independently benchmarked yet, but GPT 4.1 on the surface looks like a reasonable contestant to back auto-complete functionality. Varun from Windsurf was even on the GPT 4.1 announcement livestream a few days ago, so it's clear Windsurf does intend to use them. 3) This is probably a stock deal, not a cash deal. Not sure why the author is so convinced this has to be $3B in cash paid for Windsurf. AFAIK that hasn't been reported anywhere. 4) If agentic flows do take off, data becomes a more meaningful moat. Having a platform like Cursor or Windsurf enables these companies to collect telemetry about _how_ users are coding that isn't possible just from looking at the repo, the finished product. It opens up interesting opportunities for RLHF and other methods to refine agentic flows. That could be part of the appeal here.

theahura 2y ago
I mention in the footnotes that this is likely a stock deal! I didn't think about telemetry for RL, that's very interesting
imtringued 2y ago
If it's a stock deal that's even worse, since OpenAI is saying that their stock is definitely worth less than $3 billion.
Falimonda 2y ago
Agentic flows will soon overtake auto-complete. Models like claude sonnet 3.5 were already good enough, albeit requiring the user to actively limit context length. Most recently, gemini 2.5 pro makes the agentic workflow usable, and how!
- canadiantim 2y ago

elicksaur 2y ago

>OpenAI has also announced a social media project I haven’t heard about this before this post, but if they’re starting a “Social Media but with AI” site in 2025, can’t help but feel like they’re cooked.

seaourfreed 2y ago

I think the defensible business models in AI are up-the-stack. Windsurf category is one example. There are more. AI will lead to far bigger work accomplished than one prompt or chat at a time. Bigger work flows on humans upgrading and interacting with AI will be a big critical category for that.

croes 2y ago

Can’t be for the software because they claim AI can do it too, so $3B should be more than enough to write it from scratch.

WA 2y ago

Ironically, 3 billion is proof that these tools do not work as expected and won’t replace coders in the near future. Otherwise, why spend 3 billion if you could have it cooked up by an AI coding agent for (almost) free?

JambalayaJimbo 2y ago
Existing customer base?
- arczyx 2y ago
  OpenAI has way more users and brand recognition than Windsurf. If they decide to make their own code editor and marketed it, I'm pretty sure its customer base will surpass Windsurf's relatively quickly.

whippymopp 2y ago

if you look closely at the communications coming out of windsurf, I think it’s pretty obvious that the deal is not happening.

dagorenouf 2y ago
where did you see this?
- whippymopp 2y ago
  check the windsurf subreddit. the official reps have repeatedly said it’s pure speculation
  - rvz 2y ago
    >pure speculation Or called plausible deniability. They will always deny these reports. At the end of the day, Windsurf has a private price tag which they know they will sell at. If they were smart, they should consider selling the hype.
  - disgruntledphd2 2y ago
    They have to say that, even if the deal is real. They might not even have been told.
  - TiredOfLife 2y ago
    Google Stadia team were saying they are not shuting down minutes before they were shut down.

ramoz 2y ago

It’s a vehicle that can hit the enterprise, broad user base, training data, and gain coverage of a competitor market (I’m sure the primary LLM in windsurf is Claude just like it is in cursor). Beyond that, these IDEs have a potential path to “vibe coding for everyone” and could possibly represent the next generation of general office tooling. Might as well start with a dedicated product team vs spinning up a new one.

xnx 2y ago

The $3B number is largely and a marketing move to show what a big/real/important company OpenAI is. I hope Windsurf got some real money out of the deal too. If ChatGPT disappeared tomorrow, people would just move to the next model.

consumer451 2y ago

For anyone interested, here is an interview with Windsurf CEO and co-founder, Varun Mohan. It was released today. Not sure if it covers the potential acquisition, though I imagine not. https://www.youtube.com/watch?v=5Z0RCxDZdrE https://www.youtube.com/watch?v=5Z0RCxDZdrE

theahura 2y ago
Thanks for sharing, super interesting!

mrcwinn 2y ago

This is poor analysis. It claims OpenAI is spending “3 of its 40” billion in raised capital on Windsurf. Who said this was an all cash deal? And so if you’re purchasing with equity in whole or in part, the critical question is, do you believe this product could be worth more than $3b in the future? That’s not at all a stretch. Cursor is awfully cozy with Anthropic, as well, and so if I’m OpenAI, I don’t mind having a competitive product inserted into this space. This space, by the way, that is at the forefront of demonstrating real value creation atop your platform.

theahura 2y ago
(I mention in the footnotes that this is likely a stock deal!)

jchonphoenix 2y ago

My guess is the telemetry data. OAI spends gobs of money on Mercor and Windsurf telemetry gets them similar data. My guess is they saw their Mercor spend hitting close to 1B a year in the next 5 years if they did nothing to curb it

rvz 2y ago

Because Cursor got too greedy. Before approaching Windsurf, OpenAI wanted to buy Cursor (which is what I predicted thought too [0]) first, then the talks failed twice! [1] The fact they approached Cursor more than once tells you they REALLY wanted to buyout Cursor. But Cursor wanted more and were raising over $10B. Instead OpenAI went to Windsurf. The team at Windsurf should think carefully and they should sell because of the extreme competition, overvaluation and the current AI hype cycle. Both Windsurf and Cursor’s revenue can evaporate very quickly. Don’t get greedy like Cursor. [0] https://news.ycombinator.com/item?id=43708867 https://news.ycombinator.com/item?id=43708867 [1] https://techcrunch.com/2025/04/17/openai-pursued-cursor-maker-before-entering-into-talks-to-buy-windsurf-for-3b/ https://techcrunch.com/2025/04/17/openai-pursued-cursor-make...

bionhoward 2y ago

To take your codebase and make you dependent

dang 2y ago

Recent and related: OpenAI looked at buying Cursor creator before turning to Windsurf - https://news.ycombinator.com/item?id=43716856 https://news.ycombinator.com/item?id=43716856 - April 2025 (115 comments) OpenAI in Talks to Buy Windsurf for About $3B - https://news.ycombinator.com/item?id=43708725 https://news.ycombinator.com/item?id=43708725 - April 2025 (44 comments)

stevenjgarner 2y ago

The article opines "though it makes me wonder just how bad OpenAI's relationship with Microsoft has gotten if they no longer have access to GitHub". Is their relationship known to be souring?

stevenjgarner 2y ago
Just learned that 'Sam Altman says OpenAI is no longer "compute-constrained" — after Microsoft lost its exclusive cloud provider status': https://news.ycombinator.com/item?id=43711688 https://news.ycombinator.com/item?id=43711688

OxfordOutlander 2y ago

It is a talent and a distribution play. Talent: obvious. Distribution: OpenAI believes the marginal token they sell will be accretive to their bottom line, so the goal then is to deliver as many tokens as possible. Windsurf already has 1k+ enterprise logos and allegedly millions of downloads. 2 m tokens × $0.00001 gross / token = $20/seat/mo; if windsrf runs 500k seats, oai books $120 m/yr gross @ 90% margin. I saw a similar dynamic play out in the UK with Pub (bar) companies. By mid-2000s, the major players were failing. Margins were nearly zero, thanks to rising costs, and securlar decline in demand, plus they had too much expensive term debt. But they represented profitable sources of distribution for the beer makers. So Heineken went on a buying spree. They didn't care about making money from the pubs themselves and were happy to run them break-even. This is because they then had a controlled channel of distribution for their beer (and they made a profit on every pint they shipped). The switching costs are very different here, and the market is still so nascent. It is a thin product and vscode‑copilot can catchup. But 1% of enterprise value ($3bn of $300bn) is not a lot to gamble on owning the #2 horse in the most promising AI end market today.

benjaminwootton 2y ago
What’s the net margin? Is anyone making money on inference yet?
theahura 2y ago
I mention distribution in the post, and reasons to be skeptical of that as the primary driver (though I agree that may be the case) Re talent, I'm not sure how big windsurf is, but aren't these teams generally quite small? $3b for a small team still seems quite high, especially since (afaik) their core area of expertise is more in UX and product than in ml research. That's not to say that UX and product aren't worth acquiring, just that the price tag is surprising if that's the primary justification.
- OxfordOutlander 2y ago
  Given Sam recently said he thinks consumer is going to be the valuable path, perhaps it is not too much to pay for a great ux/product team "Ben Thompson: What’s going to be more valuable in five years? A 1-billion daily active user destination site that doesn’t have to do customer acquisition, or the state-of-the-art model? Sam Altman: The 1-billion user site I think."

goopthink 2y ago

Why couldn’t OpenAI vibe code their own Windsurf/Cursor competitor? (Serious question). OpenAI is a technology company constantly in search of productization (ChatGPT, Sora, Dall-e), and they’ve been really good at creating product interest that converts to acquisition. An IDE is much more complex than a chat app, but given their literal billions of dollars and familiarity with developer tooling, this is a down-stack build that they could dogfood off their own tech. And especially given that some of these tools were built by tiny teams (Cursor is what, 10 people?), is this like Google and Facebook’s implicit admission that they can’t “build and grow” anymore, and need to turn to acquisitions to fuel growth?

1zael 2y ago
They are just too focused on more important problems to solve, primarily around model improvement and getting to AGI.
echan00 2y ago
They could. They prob need talent though, considering how much fish they're frying
ivanbalepin 2y ago
it still takes time to spec out, build and sell to a comparable size user base, even with 10 people. And you're not guaranteed the same results if you just try to clone all of that. If the price is right, why not take the shortcut.
- goopthink 2y ago
  Is $3 billion the right price? That might be what Windsurf is being valued at (cue the “selling to willing buyers at currently fair market prices” meme), but that’s like saying “it would cost OpenAI more than $3b to staff from zero, build a competitor, and acquire a comparable volume of paying users” … and that feels like an insane statement given the implications therein? Especially given that Windsurf (and I think Cursor too) is a VSCode fork and OpenAI is cozy enough with Microsoft? It’s not even a zero to one build.

yumraj 2y ago

Prediction: OpenAI will buy Windsurf and then make it free with one of the cheaper OpenAI plans, effectively trying to kill the other IDEs and getting access to data which helps it compete/better against Claude and Gemini. Google needs to launch its equivalent, and Anthropic needs to figure out their plan.

gman83 2y ago
Google already did: https://firebase.studio/ https://firebase.studio/
- yumraj 2y ago
  Not apples to apples, isn’t Firebase studio tied to Firebace, and not general purpose development? TBH, I didn’t look deeper since I made the above assumption based on the name.
  - gman83 2y ago
    No, it's just a rebranded version of Project IDX, their cloud-based VS Code fork. No need to use Firebase, that's just the branding.
    - yumraj 2y ago
      will take a look, thx.

memset 2y ago

Not stated in the article - and doesn’t necessarily e explain the price tag - but windsurf if simply better than cursor or Claude code. Otherwise people wouldn’t be switching to it.

cheriot 2y ago

Coding assistants are likely to be a major profit source in the near term. It's useful today and the customers (ie employers) are willing to pay for productivity. Only the beginning of the enterprise spending more on AI than consumers. When it's time to stop giving away dollars for pennies, everyone will want to be in the enterprise. The article rightly points out that OAI is not cost effective for code right now. I imagine they will optimize for the use case now.

deleted 2y ago

[deleted]

JumpCrisscross 2y ago

“it's not yet clear OpenAI actually has $40bn to spend” Do we have confirmation it was a cash transaction?

tagalog 2y ago

OpenAI probably has 3 main reasons 1. Opportunity cost of shifting their team to work on a cursor/ firebase studio/ windsurf clone while they are locked into a model arms race might be worth much more than $3 billion if risk losing supremacy 2. They get a million users day one of the deal getting done and instantly own the team + the number 2 best IDE which gives them a massive boost over all their other model competitors like Google and Anthropic. Personally, I still think we are early enough that building makes more sense, so reason 1 still feels the strongest. 3. You get the dedicated windsurf team that can focus 100% on this product while your main model teams can keep cranking

machiaweliczny 2y ago
IMO people underestimate effort of hiring people with domain expertise for this. Maybe they can try to buy one person from these teams and then have it help build the core IDE team but this will take much longer than just buying a very strong team.

revskill 2y ago

They should build ide using their ai. Lol they are jst bullshit generators.

parsabg 2y ago

> Windsurf is providing OpenAI access to data? There's certainly some possibility that this is the case — though it makes me wonder just how bad OpenAI's relationship with Microsoft has gotten if they no longer have access to GitHub This is missing an important nuance. The valuable data generated through coding copilots isn't the code, but the step by step human-AI interaction to produce the code. Windsurf and Cursor are effectively crowdsourced data annotation farms which give their owners an edge in providing better coding models. I think this is way more important than talent or software in this deal.

farhantawfeeq56 1y ago

Because even vibe coding is hard