Microsoft Considered Buying Cursor Before SpaceX Deal, Sources Claim

• SpaceX agreed to acquire Cursor for $60 billion or pay $10 billion if the deal doesn't close by year's end, catching venture capital firms by surprise during Cursor's fundraising process at a $50 billion valuation
• GitHub Copilot has 4.7 million paying users, while OpenAI's Codex reached 4 million active users and Anthropic's Claude Code service is gaining market share
• Microsoft stock has dropped 10% this year, underperforming peers as the company struggles to compete in the rapidly growing AI coding tools market despite investing billions in OpenAI and Anthropic

Microsoft Considered Cursor Acquisition Before SpaceX's $60B Deal

Key Developments:

Microsoft explored acquiring AI coding startup Cursor in recent weeks but ultimately declined to make an offer, according to sources. Days later, SpaceX announced it obtained rights to acquire Cursor for $60 billion by year-end, or will pay the company $10 billion if the deal falls through.

Deal Context:

• Venture capital firms had previously lined up financing for Cursor at a $50 billion valuation
• The SpaceX agreement materialized late in Cursor's fundraising process, catching prospective investors off guard
• SpaceX offered Cursor compute access in the weeks preceding the announcement
• SpaceX merged with Musk's xAI in February in a $1.25 trillion deal, with a record IPO in process

Market Landscape:

The AI coding market is currently dominated by Cursor, Anthropic, and OpenAI. Microsoft has positioned itself primarily as an investor and cloud provider, investing billions in both Anthropic and OpenAI, which utilize Microsoft Azure infrastructure.

Competitive Positioning:

• Microsoft GitHub Copilot: 4.7 million paying users
• OpenAI Codex: 4 million active users (growing rapidly from 3 million less than two weeks prior)
• Anthropic Claude Code: Gaining popularity, helping Anthropic reach strong annualized revenue this month

Market Performance:

Microsoft stock has declined 10% year-to-date, underperforming both the broader market and hyperscaler competitors, raising pressure on CEO Satya Nadella to strengthen the company's AI positioning.

The acquisition battle underscores the intense competition and premium valuations in the AI coding assistant market, where companies are racing to capture developer mindshare.