How Google Killed OpenAI’s $3 Billion Deal With out an Acquisition

Google simply dealt OpenAI a serious blow by scuttling a possible $3 billion deal, and in doing so, solidified a rising pattern in Silicon Valley’s AI arms race: the “non-acquisition acquisition.”

Google introduced on July 11 that it poached key expertise from the quickly rising AI startup Windsurf, which till then had a reported $3 billion acquisition cope with OpenAI that has now collapsed. As a substitute, Google is paying $2.4 billion to rent away prime Windsurf staff, together with the corporate’s CEO, and take a non-exclusive license to its expertise, based on Bloomberg.

By poaching Windsurf’s prime brains however not buying the startup itself, Google achieved two crucial objectives directly: it nullified OpenAI’s momentum and gained entry to the startup’s invaluable AI expertise.

Friday’s announcement is just the most recent occasion of what’s more and more turning into the go-to tactic for giant tech firms seeking to develop their aggressive edge. Tech analysts have described it as a “non-acquisition acquisition,” or extra merely, an “acqui-hire.”

The Poaching Wars Have Begun

OpenAI, the corporate behind ChatGPT, ignited the present AI frenzy again in 2022 and has been the chief in generative AI ever since. However its market lead is being more and more challenged by massive tech rivals like Google and Meta, and it’s now clearer than ever that elite AI engineers are probably the most invaluable foreign money on this combat for dominance.

Not too long ago, OpenAI has discovered itself a main goal. After a sequence of high-profile expertise raids by Meta, OpenAI executives described the sensation as if “somebody has damaged into our residence and stolen one thing,” in an inner memo obtained by WIRED.

The most important aggressor on this new period of “the poaching wars” has been Meta. In April 2025, CEO Mark Zuckerberg admitted that the corporate had fallen behind rivals within the AI race. His feedback sparked a multi-billion-dollar spending spree marked by strategic expertise hires. Meta employed ScaleAI CEO Alexandr Wang, Apple’s prime AI thoughts Ruoming Pang, and Nat Friedman, former CEO of Microsoft-owned GitHub, in addition to a number of prime OpenAI staff tempted by multi-year offers value hundreds of thousands. The corporate is gathering this expertise below a brand new group devoted to growing AI superintelligence known as Meta Superintelligence Labs.

Comparable acqui-hire offers had been struck by Microsoft and Amazon final yr. Microsoft employed prime staff from AI startup Inflection, together with co-founder Mustafa Suleyman, who now leads Microsoft’s AI division. Amazon employed co-founders and different prime expertise from the AI agent startup Adept.

This isn’t Google’s first rodeo with acqui-hiring, both. The tech big inked an identical cope with the startup Character.AI roughly a yr in the past, which gave Google a non-exclusive license to its LLM expertise and noticed its two co-founders be a part of the corporate.

Why Rent however Not Purchase: A Regulatory Loophole

Past simply being a logo of a brand new period within the AI arms race, this surge in acqui-hires reveals a brand new playbook for Large Tech to develop its market dominance whereas sidestepping antitrust scrutiny. This tactic follows a interval of intense regulatory stress below former Federal Commerce Fee (FTC) chairwoman Lina Khan, whose administration cracked down on alleged anti-competitive practices within the AI trade.

Each Meta and Google are already below intense scrutiny from the FTC.

Meta is awaiting a verdict on an antitrust trial over the FTC’s declare that it holds a monopoly over social media. Google, then again, has been dealt quite a few antitrust defeats up to now yr, accused of getting monopolies in each web search and internet marketing. The corporate is awaiting the ultimate outcomes of a trial that would probably see it pressured to divest from its Chrome browser.

Early final yr, below Khan’s management, the Fee additionally launched an investigation into Microsoft, Amazon, and Google over their investments in AI startups OpenAI and Anthropic.

Underneath this cloud of regulatory stress, it appears acqui-hiring is proving to be a simple method for Large Tech to get what it desires. The large names acquire all the required entry to the expertise and prime analysis expertise of AI startups with out having to undergo the vetting hurdles of a proper acquisition.

Going ahead, it’s now as much as the present FTC, below Trump-appointed chairman Andrew Ferguson, to outline its stance on this follow. Whereas not seen as the identical sort of hardliner towards Large Tech as Khan, Ferguson has largely continued to pursue the earlier administration’s investigations, whilst President Trump has entertained Silicon Valley leaders at Mar-a-Lago.

How Ferguson’s FTC and the Trump administration at giant select to reply, or not, to this new wave of regulatory loopholes will decide the way forward for American massive tech and the AI trade as a complete.