Abstract: Developing generalizable surgical AI requires multi-institutional data, yet privacy constraints preclude direct data sharing, making Federated Learning (FL) a natural candidate. Its application to complex, spatiotemporal surgical video remains largely unbenchmarked. We present the FedSurg Challenge, the first international initiative dedicated to FL in surgical vision, as a proof-of-concept evaluation using a multi-center dataset of laparoscopic appendectomies (subset of Appendix300). Three participant submissions were evaluated on generalization to an unseen clinical center and center-specific local adaptation, alongside centralized, Swarm Learning, parameter-efficient fine-tuning baselines, and reference classifiers. Our analysis identifies temporal modeling as the architectural factor most consistently associated with generalization to the unseen center, although effects vary across metrics. Classifier collapse arises from both the global model's failure to transfer under domain shift and unconstrained fine-tuning on small, imbalanced local datasets, motivating structured personalized FL for center-specific adaptation. Absolute performance remains far from clinical viability: even with all data pooled centrally, the task reached a 26.31% F1-score on the unseen center. Paired permutation tests resolve only large differences, and no adaptation comparison reaches significance at this sample size. By characterizing these limitations, this work establishes a methodological reference point for privacy-preserving surgical video AI.
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