Microsoft quietly kicked the tires on Cursor, the fastest-growing AI coding startup in the industry, before stepping back without making a formal bid — a decision that now looks more consequential as SpaceX has stepped in with a $60 billion option to acquire the company. CNBC first reported the talks on April 22, citing sources familiar with the matter, and the story widened on April 23 as fresh details emerged about the competitive dynamic reshaping the AI coding market.
A missed swing for Redmond
According to CNBC, Microsoft evaluated a potential acquisition of Cursor (legally known as Anysphere) in recent weeks but ultimately chose not to proceed. Neither the offer amount nor the reason for walking away was disclosed by the company. The timing is awkward: Microsoft owns GitHub Copilot, the AI coding assistant that effectively launched the category, yet Cursor has run away with mindshare among professional developers and is now closing the gap — or leading — on daily active users inside engineering teams.
Reports citing early 2026 figures put GitHub Copilot at roughly 6 million daily active users in March, compared with about 9 million for Anthropic's Claude and 440 million for OpenAI's ChatGPT. CEO Satya Nadella has reportedly rallied the company around a "Copilot code red" initiative aimed at closing that distribution gap, making the decision to pass on Cursor harder to parse externally.
SpaceX steps into the gap
With Microsoft on the sidelines, SpaceX announced a deal that gives it an option to purchase Cursor for $60 billion by the end of the year, or else pay a $10 billion partnership fee. Cursor CEO Michael Truell, a 25-year-old former Google intern, said on X that he was "excited to partner with the SpaceX team to scale up Composer," the company's in-house coding model. Elon Musk's xAI Colossus cluster — described as roughly a million H100-equivalent GPUs — is expected to anchor training for future Cursor-SpaceX models.
The structure effectively freezes out other acquirers while Cursor keeps raising capital. Separately, Cursor has been in advanced talks with Andreessen Horowitz and Thrive Capital to close around $2 billion in new funding at a $50 billion valuation, with Nvidia joining as a strategic investor — a round that would have minted huge gains for early backers regardless of whether SpaceX exercises its option.
Implications
Microsoft's pass signals one of two things: either the price had drifted beyond what Redmond could justify without cannibalizing its own Copilot roadmap, or the integration risk of absorbing a fast-moving startup into its enterprise machine outweighed the distribution boost. Either reading is unflattering while Nadella's teams are openly chasing adoption. For the broader market, the SpaceX option turns Cursor into part of Musk's AI stack, layering coding on top of xAI's infrastructure and Grok — and further fragmenting the AI tooling landscape into model-plus-IDE camps led by OpenAI, Anthropic, Google, and now SpaceX-backed Cursor.
