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.

- Forking VSCode is very easy; you can do it in 1 hour.

- Anthropic doesn't use the inputs for training.

- Cursor doesn't have $900M ARR. That was the raise. Their ARR is ~$500m [1].

- Claude Code already support the niceties, including "add selection to chat", accessing IDE's realtime warnings and errors (built-in tool 'ideDiagnostics'), and using IDE's native diff viewer for reviewing the edits.

[1] https://techcrunch.com/2025/06/05/cursors-anysphere-nabs-9-9...

The cost of the fork isn't creating it, it's maintaining it. But maybe AI could help :/

The cost of vscode fork is that microsoft has restricted extension marketplace for forks. You have to maintain separate one, that is the real dealbreaker