SpaceX and Cursor, a developer of an AI-based software development environment, have entered into a mega-deal that has turned out to be an even broader power play in the AI market. According to insider sources, Microsoft also considered buying Cursor, but ultimately withdrew from the negotiations before SpaceX secured a multi-billion dollar cooperation agreement and an option for a potential acquisition.
According to reports, Microsoft seriously evaluated acquiring Cursor but did not proceed to a formal offer. There has been much speculation about why Microsoft ultimately did not make a bid for Cursor: the company already has a strong position in developer tools through GitHub Copilot and Visual Studio Code, but on the other hand, Cursor has rapidly grown into one of the most popular AI-based programming environments. One possible obstacle to a Microsoft bid is thought to have been that the deal would likely have come under scrutiny from competition authorities.
After Microsoft bowed out, a cooperation agreement between SpaceX and Cursor was concluded. Under it, SpaceX has two ways to move forward: first, SpaceX will in any case pay Cursor about $10 billion for computing power and collaboration under the agreement - but it also retains the option to buy Cursor outright for about $60 billion.
According to outlets that have reported on the matter, such as Neowin and CNBC, SpaceX did not buy Cursor immediately because a full acquisition was feared to delay SpaceX's planned stock market listing. The purchase option now agreed gives SpaceX the ability to immediately leverage Cursor's technology and expertise, while postponing the decision on a final acquisition to a later date.
At the same time, Elon Musk's company is inserting itself in a major way onto software developers' desktops for the first time. Musk's personal brand has been problematic for Tesla, which he owns, especially in Europe, so it will be interesting to see whether the newly signed cooperation agreement and a possible later acquisition affect Cursor's popularity among developers.
After Microsoft bowed out, a cooperation agreement between SpaceX and Cursor was concluded. Under it, SpaceX has two ways to move forward: first, SpaceX will in any case pay Cursor about $10 billion for computing power and collaboration under the agreement - but it also retains the option to buy Cursor outright for about $60 billion.
According to outlets that have reported on the matter, such as Neowin and CNBC, SpaceX did not buy Cursor immediately because a full acquisition was feared to delay SpaceX's planned stock market listing. The purchase option now agreed gives SpaceX the ability to immediately leverage Cursor's technology and expertise, while postponing the decision on a final acquisition to a later date.
At the same time, Elon Musk's company is inserting itself in a major way onto software developers' desktops for the first time. Musk's personal brand has been problematic for Tesla, which he owns, especially in Europe, so it will be interesting to see whether the newly signed cooperation agreement and a possible later acquisition affect Cursor's popularity among developers.
