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

IMO other than the Microsoft IP issue, I think the biggest thing that has shifted since this acquisition was first in the works is Claude Code has absolutely exploded. Forking an IDE and all the expense that comes with that feels like a waste of effort, considering the number of free/open source CLI agentic tools that are out there.

Let's review the current state of things:

- Terminal CLI agents are several orders of magnitude less $$$ to develop than forking an entire IDE.

- CC is dead simple to onboard (use whatever IDE you're using now, with a simple extension for some UX improvements).

- Anthropic is free to aggressively undercut their own API margins (and middlemen like Cursor) in exchange for more predictable subscription revenue + training data access.

What does Cursor/Windsurf offer over VS Code + CC?

- Tab completion model (Cursor's remaining moat)

- Some UI niceties like "add selection to chat", and etc.

Personally I think this is a harbinger of where things are going. Cursor was fastest to $900M ARR and IMO will be fastest back down again.

Agreed on everything. Just to add, not only anthropic is offering CC at like a 500% loss, they restricted sonnet/opus 4 access to windsurf, and jacked up their enterprise deal to Cursor. The increase in price was so big that it forced cursor to make that disastrous downgrade to their plans.

I think only way Cursor and other UX wrappers still win is if on device models or at least open source models catch up in the next 2 years. Then i can see a big push for UX if models are truly a commodity. But as long as claude is much better then yes they hold all the cards. (And don't have a bigger company to have a civil war with like openai)

Seems like the survival strategy for cursor would be to develop their own frontier coding model. Maybe they can leverage the data from their still somewhat significant lead in the space to make a solid effort.

I don’t think that’s a viable strategy. It is very very hard and not many people can do it. Just look at how much Meta is paying to poach the few people in the world capable of training a next gen frontier model.

Why are there actually only a few people in the world able to do this?

The basic concept is out there.

Lots of smart people studying hard to catch up to also be poached. No shortage of those I assume.

Good trainingsdata still seems the most important to me.

(and lots of hardware)

Or does the specific training still involves lots of smart decisions all the time?

And those small or big decisions make all the difference?

Why are there so few people in the world able to run 100m in sub 10s?

The basic concept is out there: run very fast.

Lots of people running every day who could be poached. No shortage of those I assume.

Good running shoes still seem the most important to me.