OpenAI’s Windsurf deal is off, and Windsurf’s CEO is going to Google

So the result of aggressively scrutinizing big tech acquisitions is acquihires, not a more competitive tech ecosystem with say more IPO’s.

The libertarian spin on this would be government should have never scrutinized acquisitions and the result is just worse for everyone.

The progressive spin would be to now ban acquihires somehow, and then whatever new legal invention will be created next. I can imagine the next step being, creating a consulting company out of your startup and then selling yourself as consultants to big techs. Now you are neither acquired nor technically acqui-hired and the whackamole continues.

At some point, we need to realize the solution is the culture of people involved. If the government could just ask to reduce acquisitions to make the ecosystem more competitive and companies tried following it in spirit to the best of their ability, we might have much better results than whatever we have now. When culture degrades, the govt can’t trust companies, the companies can’t trust the govt, everything just gets worse, regardless of what rules you write and enforce.

This wasn't a result of regulator scrutiny. The issue was that MS (owner of Copilot) was demanding access to the IP (due to their existing agreement with OpenAI), and OpenAI was resisting. In addition, Claude blocked access to Windsurf, which also damaged them as an acquisition target.

Nothing to do with regulators.

I find this hard to believe considering all the recent acquihires that happened recently like Character AI, Inflection, Covariant AI, Scale AI, context AI and so on. Maybe you’re right about the specifics of this situation, but my prior for this being an acquihire is very high and I would need to see very compelling evidence that that is not the case.

The culture of the people involved got us to this point, I’m not sure it’s the solution to the problem.

> The progressive spin would be to now ban acquihires somehow, and then whatever new legal invention will be created next.

Progressive has become a moving target, but the pro-competition view would be to break up the massively concentrated companies that are further consolidating markets. Thats what the Khan FTC was trying to do, but we need a Congress interested in a competitive marketplace, which we haven’t had in a while.