Cognition AI’s takeover of Windsurf in July 2025 was introduced as a major consolidation in the AI coding market. The San Francisco–based company, known for its autonomous coding agent Devin, announced that it was acquiring Windsurf’s IP, product, brand, and “world-class people.” In the same breath, it promised accelerated equity vesting and equal treatment for all incoming employees.
The deal brought together two companies targeting different corners of the developer tools market. Windsurf, an IDE-focused AI coding startup, had grown to $82 million in annual recurring revenue and more than 350 enterprise customers. But it had already undergone major changes earlier in the year. OpenAI’s proposed $3 billion acquisition of Windsurf had collapsed, and in July, Google stepped in with a $2.4 billion licensing deal for Windsurf’s AI coding models. As part of that transaction, Google hired CEO Varun Mohan, co-founder Douglas Chen, and other senior researchers. That left Windsurf with a 250-person team running the enterprise product but without its founding leadership.
When Cognition announced its acquisition shortly afterward, the messaging suggested a long-term integration of that team. CEO Scott Wu praised Windsurf’s “world-class people” and positioned the transaction as a union of talent and technology that would accelerate Cognition’s growth.
People have asked about our culture and recent employee communications. Cognition has an extreme performance culture, and we’re upfront about this in hiring so there are no surprises later. We routinely are at the office through the weekend and do some of our best work late into…
— Scott Wu (@ScottWu46) August 5, 2025
Three weeks later, the integration narrative was replaced by a very different set of actions. Cognition laid off 30 former Windsurf employees outright and offered voluntary buyouts to roughly 200 more. Those who stayed were told they would be expected to work in the office six days a week and log more than 80 hours.
In an internal memo, Wu wrote:
“We don’t believe in work-life balance, building the future of software engineering is a mission we all care so deeply about that we couldn’t possibly separate the two. Many of us literally live where we work.”
Employees were given until August 10 to decide whether to accept a severance package worth nine months of salary or commit to the new schedule. The severance terms were notable unusually generous for Silicon Valley but several industry voices saw them as a clear signal that Cognition preferred to slim down the team rather than attempt a full integration.
Reaction from current and former tech workers was swift. On Reddit, one user called Wu’s statement “a Silicon Valley villain monologue.” Another observed that the payout “likely means Cognition wants people to take it,” describing it as a way to secure Windsurf’s IP and customers without the complications of merging teams. Business Insider described the move as a break from the industry’s informal social contract, in which early employees accept the risks of joining a startup with the expectation of being rewarded, not sidelined if it is acquired.
How Other AI Acquisitions Were Handled
The handling of Windsurf contrasts with most large AI transactions in 2024 and 2025, where buyers have largely retained entire engineering teams as part of the strategic value.
Microsoft’s March 2024 deal with Inflection AI, worth $650 million, licensed the startup’s AI models while hiring almost all of its 70-person staff. Co-founder Mustafa Suleyman became head of a new consumer AI division, with co-founder Karén Simonyan as chief scientist. Inflection continued operating under new CEO Sean White, with no layoffs reported. Regulators in the U.S. and UK reviewed the transaction to determine whether it was effectively a merger structured to avoid antitrust filings, but both ultimately cleared it.
Google DeepMind has repeatedly used what it calls “reverse acqui-hires” to bring in founders and key researchers without dismantling the rest of the company. In August 2024, Google licensed technology from Character.AI and hired founders Noam Shazeer and Daniel DeFreitas, along with several engineers. Character.AI continued operations under interim CEO Dominic Perella. The same model was used with Windsurf in July 2025, when Google licensed its coding models and hired top technical leaders while leaving the remaining 250-person team to run the enterprise product. In both cases, there were no mass layoffs.
Apple’s acquisition of Canadian computer vision startup DarwinAI in March 2024 followed the company’s typical low-profile approach. The purchase was not formally announced but was confirmed through Bloomberg and Reuters reports. DarwinAI’s engineers joined Apple’s machine-learning division, its product was discontinued, and no layoffs were reported.
Salesforce’s 2025 acquisitions of Convergence.ai and Bluebirds were positioned as team integrations to strengthen its Agentforce platform. In public statements, Salesforce emphasised the value of bringing founders and engineering teams directly into its R&D organisation. No cuts were announced.
IBM’s June 2025 purchase of Seek AI, a New York company that converts natural-language questions into database queries, became the foundation for a new Watsonx AI Labs hub in New York. IBM said the deal would “significantly expand” the team, and Seek’s CEO stayed on to lead development.
In the semiconductor sector, NVIDIA’s March 2025 acquisition of Gretel, a synthetic data startup with roughly 80 employees, brought the full team into NVIDIA’s generative AI services group. AMD’s June 2025 acquisitions of Untether AI and Brium absorbed their hardware, software, and compiler engineering teams in full, ending the companies’ independent operations but retaining staff.
While Microsoft, Google, Apple, Salesforce, IBM, NVIDIA, and AMD have largely treated engineering teams as core assets to be retained, Cognition moved quickly to cut headcount and impose a far more demanding pace of work. One Reddit user summed up the perception: “This doesn’t look like a company trying to retain talent — it looks like they just wanted Windsurf’s IP and are pushing the team out without the bad PR of mass firings. What’s worse is they’re dressing it up as “intense culture” or “high standards,” when it’s really just code for “you won’t have a life here.” Now where most buyers have treated teams as strategic to the deal, this approach points to a different theme, when the code and customers are secured, the team may be optional.
