Google negotiates over $1.5 billion deal to tap Mechanize’s AI coding team

Google has entered talks to strike a multi-billion-dollar agreement with Mechanize, a San Francisco-based AI coding agent startup. The proposed deal, estimated to exceed $1.5 billion, would see Google hiring four of Mechanize’s engineers to focus on model evaluation and development, alongside a non-exclusive licensing pact for the firm’s technology. This hybrid approach follows Google’s recent pattern of combining acquihires with technology licensing to sidestep antitrust hurdles, exemplified by its 2023 acquisition of Windsurf’s staff and a licensing deal with Character AI.

Mechanize, founded by former Epoch AI co-founder Tamay Besiroglu, counts former GitHub CEO Nat Friedman, Stripe CEO Patrick Collison and podcaster Dwarkesh Patel among its investors, and disclosed a $9.1 million raise at a $500 million valuation earlier this year. The startup’s tools aim to improve AI coding performance, an area where Google has lagged behind rivals like OpenAI and Anthropic. Both parties have declined to comment on the negotiations.