Tech Giants Skirt Regulators by Poaching AI Startups for Talent

A new trend in top talent acquisition is taking shape within the artificial intelligence (AI) sector, which includes Microsoft, Google and Amazon. Their deal orchestrations look just like acquisitions, but technically, they really are not. The subject of a recent CNBC report, these “pseudo-acquisitions” allow the tech giants to poach top employees and license critical technology without tripping the traditional scrutiny of full mergers.

Google’s recent deal with Character.ai is a prime example. Rather than purchasing the entire company, Google brought co-founder Noam Shazeer and a significant portion of the startup’s workforce back into its fold while licensing the startup’s technology. This approach enables Google to acquire valuable talent and tech without a full acquisition, thus avoiding regulatory oversight.

Microsoft used a similar strategy earlier this year when it signed a $650 million deal with Inflection, an AI startup, allowing the tech giant to access Inflection’s AI models and hire most of its staff, including its founder, Mustafa Suleyman. Amazon followed suit in June by striking a deal with Adept AI, paying $330 million to license technology and offering a $100 million retention bonus to key employees.

These moves allow big tech companies to gain an edge in the AI arms race while bypassing potential antitrust hurdles. However, this strategy has not gone unnoticed. The Federal Trade Commission (FTC) has opened investigations into Microsoft’s and Amazon’s deals, and regulators are increasingly concerned about the potential for anti-competitive behavior in the burgeoning AI industry.