Acquisitions, consolidation, and innovation in AI

The rumors of OpenAI potentially acquiring Windsurf last week triggered a whole round of new takes on the internet: concerns about moving up into the application layer, fears of widespread consolidation, and our perennial favorite, concerns about the demise of all AI application startups when OpenAI inevitably creates super-intelligence. We’ve talked about many of these topics in the last year — where innovation will come from, when and whether acquisitions will happen, and the ongoing claims that, this time, the incumbents actually will win the arms race. While we typically try not to spend too much time reacting to the news, this is right up our alley so we couldn’t resist. As we wrote this post, we found ourselves referring back to many of the things we’ve written about over the last year, so we’ll link back to the relevant deep dives as we go. At a high level, we generally agree that — if this acquisition does in fact materialize — this is going to trigger a wave of activity and ... Read full article.