How Google Undermined OpenAI's $3 Billion Deal Without Buying It

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

Google announced on July 11 that it poached key talent from the rapidly rising AI startup Windsurf, which until then had a reported $3 billion acquisition deal with OpenAI that has now collapsed. Instead, Google is paying $2.4 billion to hire away top Windsurf employees, including the company’s CEO, and take a non-exclusive license to its technology, according to Bloomberg.

By poaching Windsurf’s top brains but not acquiring the startup itself, Google achieved two critical goals at once: it nullified OpenAI’s momentum and gained access to the startup’s valuable AI technology.

Friday’s announcement is only the latest instance of what is increasingly becoming the go-to tactic for big tech companies looking to grow their competitive edge. Tech analysts have described it as a “non-acquisition acquisition,” or more simply, an “acqui-hire.”

The Poaching Wars Have Begun

OpenAI, the company behind ChatGPT, ignited the current AI frenzy back in 2022 and has been the leader in generative AI ever since. But its market lead is being increasingly challenged by big tech competitors like Google and Meta, and it is now clearer than ever that elite AI engineers are the most valuable currency in this fight for dominance.

Recently, OpenAI has found itself a primary target. After a series of high-profile talent raids by Meta, OpenAI executives described the feeling as though “someone has broken into our home and stolen something,” in an internal memo obtained by WIRED.

The biggest aggressor in this new era of “the poaching wars” has been Meta. In April 2025, CEO Mark Zuckerberg admitted that the company had fallen behind competitors in the AI race. His comments sparked a multi-billion-dollar spending spree marked by strategic talent hires. Meta hired ScaleAI CEO Alexandr Wang, Apple’s top AI mind Ruoming Pang, and Nat Friedman, former CEO of Microsoft-owned GitHub, as well as multiple top OpenAI employees tempted by multi-year deals worth millions. The company is gathering this talent under a new group dedicated to developing AI superintelligence called Meta Superintelligence Labs.

Similar acqui-hire deals were struck by Microsoft and Amazon last year. Microsoft hired top employees from AI startup Inflection, including co-founder Mustafa Suleyman, who now leads Microsoft’s AI division. Amazon hired co-founders and other top talent from the AI agent startup Adept.

This isn’t Google’s first rodeo with acqui-hiring, either. The tech giant inked a similar deal with the startup Character.AI roughly a year ago, which gave Google a non-exclusive license to its LLM technology and saw its two co-founders join the company.

Why Hire but Not Acquire: A Regulatory Loophole

Beyond just being a symbol of a new era in the AI arms race, this surge in acqui-hires reveals a new playbook for Big Tech to grow its market dominance while sidestepping antitrust scrutiny. This tactic follows a period of intense regulatory pressure under former Federal Trade Commission (FTC) chairwoman Lina Khan, whose administration cracked down on alleged anti-competitive practices in the AI industry.

Both Meta and Google are already under intense scrutiny from the FTC.

Meta is awaiting a verdict on an antitrust trial over the FTC’s claim that it holds a monopoly over social media. Google, on the other hand, has been dealt numerous antitrust defeats in the past year, accused of having monopolies in both internet search and online advertising. The company is awaiting the final results of a trial that could potentially see it forced to divest from its Chrome browser.

Early last year, under Khan’s leadership, the Commission also launched an investigation into Microsoft, Amazon, and Google over their investments in AI startups OpenAI and Anthropic.

Under this cloud of regulatory pressure, it seems acqui-hiring is proving to be an easy way for Big Tech to get what it wants. The big names gain all the necessary access to the technology and top research talent of AI startups without having to go through the vetting hurdles of a formal acquisition.

Going forward, it is now up to the current FTC, under Trump-appointed chairman Andrew Ferguson, to define its stance on this practice. While not seen as the same kind of hardliner against Big Tech as Khan, Ferguson has largely continued to pursue the previous administration’s investigations, even as President Trump has entertained Silicon Valley leaders at Mar-a-Lago.

How Ferguson’s FTC and the Trump administration at large choose to respond, or not, to this new wave of regulatory loopholes will determine the future of American big tech and the AI industry as a whole.