Hello and welcome to Eye on AI…In this edition: Meta is going big on data centers…the EU publishes its code of practice for general purpose AI and OpenAI says it will abide by it…the U.K. AI Security Institute calls into question AI “scheming” research.
The big news at the end of last week was that OpenAI’s plans to acquire Windsurf, a startup that was making AI software for coding, for $3 billion fell apart. (My Fortune colleague Allie Garfinkle broke that bit of news.) Instead, Google announced that it was hiring Windsurf’s CEO Varun Mohan and cofounder Douglas Chen and a clutch of other Windsurf staffers, while also licensing Windsurf’s tech—a deal structured similarly to several other big tech-AI startup not-quite-acquihire acquihires, including Meta’s recent deal with Scale AI, Google’s deal with Character.ai last year, as well as Microsoft’s deal with Inflection and Amazon’s with Adept. Bloomberg reported that Google is paying about $2.4 billion for Windsurf’s talent and tech, while another AI startup, Cognition, swooped in to buy what was left of Windsurf for an undisclosed sum. Windsurf may have gotten less than OpenAI was offering, but OpenAI’s purchase reportedly fell apart after OpenAI and Microsoft couldn’t agree on whether Microsoft would have access to Windsurf’s tech.The increasingly fraught relationship between OpenAI and Microsoft is worth a whole separate story. So too is the structure of these non-acquisition acquihires—which really do seem to blunt any legal challenges, either from regulators or the venture backers of the startups. But today, I want to talk about coding assistants. While a lot of people debate the return on investment from generative AI, the one thing seemingly everyone can agree on is that coding is the one clear killer use case for genAI. Right? I mean, that’s why Windsurf was such a hot property and why Anyshphere, the startup behind the popular AI coding assistant Cursor, was recently valued at close to $10 billion. And GitHub Copilot is of course the star of Microsoft’s suite of AI tools, with a majority of customers saying they get value out of the product. Well, a trio of papers published this past week complicate this picture.
