OpenAI’s Windsurf acquisition strains partnership with Microsoft: report

OpenAI’s recent acquisition of Windsurf has possibly affected the startup’s long-standing partnership with Microsoft (NASDAQ:MSFT), according to the Wall Street Journal.

The terms of OpenAI’s $3B acquisition of Windsurf, a coding startup, has strained the relationship, according to the report, citing people familiar with the matter. Microsoft currently has access to all of OpenAI’s intellectual property. Reportedly, OpenAI does not want to open this same level of access to Windsurf.

However, the companies downplayed the report.

“We have a long-term, productive partnership that has delivered amazing AI tools for everyone,” representatives for the two companies told the Wall Street Journal in a statement. “Talks are ongoing and we are optimistic we will continue to build together for years to come.”

Microsoft initially invested $1B in OpenAI in 2019. The investment has grown over the years to approximately $13B.

In return for the investments, Microsoft has retained exclusive rights to sell OpenAI’s artificial intelligence tools through its cloud service Azure, the report said. Microsoft also holds preferred access to its technology.

Also at issue is OpenAI’s transition to a public benefit corporation. Microsoft wants a larger share of the public company than OpenAI would like, the report said.

Seeking Alpha reached out to Microsoft for comment.