Cognition Acquires Windsurf in High-Stakes AI Coding Shakeup
Windsurf was almost OpenAI’s Crown Jewel. Google took its Crown. Cognition took the Kingdom
In one of the most dramatic events in the fast-moving world of AI, Cognition, the startup behind the ambitious AI coding agent Devin, has officially acquired Windsurf, a rival known for its agentic integrated development environment (IDE). The deal, announced Monday, caps off a whirlwind 72 hours that saw Windsurf nearly acquired by OpenAI, then gutted by a billion-dollar weird reverse-acquihire from Google; and ultimately scooped up by Cognition!
The agreement transfers to Cognition not only Windsurf’s core product and intellectual property, but also its trademark, brand, and remaining 250-person team. The price of the deal remains undisclosed, but it includes $82 million in annual recurring revenue (ARR) and a customer base of over 350 enterprises, plus hundreds of thousands of daily active users.
“With this deal, we’re doubling down on our mission of building the future of software engineering,” said Scott Wu, Cognition’s CEO, in a note to his team.
From Chaos to Consolidation
The road to this acquisition was anything but linear. Just days earlier, Windsurf’s leadership departed for Google in a $2.4 billion reverse-acquihire, following the collapse of a $3 billion acquisition deal with OpenAI. The OpenAI offer reportedly disintegrated over IP-sharing complications involving Microsoft, clearing the path for Google’s opportunistic move.
This left Windsurf’s core product and the majority of its team in limbo — until Cognition stepped in.
According to Russell Kaplan, President of Cognition, the acquisition “came together over the weekend” with the first call placed Friday evening and the agreement signed by Monday morning.
A Talent-First Acquisition
While the technology is impressive, it’s the people Cognition seems most excited about.
“Above all, we are welcoming some of the most impressive people in our industry,” said Wu. “World-class GTM, engineering, and product teams.”
Cognition emphasized that 100% of Windsurf employees would benefit from the transaction, with full participation in the financial upside, waived vesting cliffs, and accelerated equity for work done to date. The stark contrast with Google’s deal, which reportedly left recent hires empty-handed, drew praise across the tech community.
Claude Access Restored, Vision Realigned
The acquisition also restores Windsurf’s direct access to Anthropic’s Claude AI models, which had been revoked in June. That decision, according to Anthropic, stemmed from rumors of OpenAI's impending acquisition and caused several enterprise clients to defect to competitors like Cursor.
Now, under Cognition, Windsurf regains this key capability. A move that could prove pivotal as the company integrates its IDE into Cognition’s agentic stack.
The Bigger Picture: IDE + Agent = Platform Play
The AI coding space is evolving rapidly. Cursor currently leads the market with $500 million in ARR. While Windsurf trails that figure, its growth has been steep, with enterprise revenue doubling quarter-over-quarter.
Cognition is positioning itself to compete more directly with Cursor, Anthropic, and OpenAI by offering a more complete AI development platform, one that combines the strengths of an AI-powered IDE with a fully autonomous agent like Devin.
“There’s only one boat, and we’re all in it together,” Wu told his team, signaling a united front.
Earlier this week, Cognition secured a major enterprise deal with Goldman Sachs, a sign that its strategy may already be gaining traction.
The Stakes of the Agentic Future
Cognition made headlines earlier this year with Devin, the first AI coding agent to go beyond code suggestions and tackle entire software tasks autonomously. Though early versions were buggy, the market is quickly catching up. Cursor and Windsurf had both begun rolling out more “agentic” features, and even skeptics now believe AI agents will handle up to 20% of all coding workflows by 2026.
By acquiring Windsurf, Cognition gains not just a product, but a strategic edge. While competitors focus on point solutions, Cognition now controls both ends of the developer workflow.
And with OpenAI’s failed bid, Google’s partial hire, and Cursor’s growing ARR, the battle lines in AI software engineering have never been more clearly drawn.
In a matter of hours, Cognition went from a promising AI agent company to a full-stack contender in the race to define the next generation of software engineering. The acquisition of Windsurf could mark the moment Cognition stopped chasing the future and started building it.