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In the race to stay ahead in artificial intelligence, the biggest technology companies are swallowing up the talent and products of innovative AI startups without formally acquiring them.<\/p>\n
San Francisco-based Adept announced a deal late last month that will send its CEO and key employees to Amazon<\/a> and give the e-commerce giant a license to Adept\u2019s AI systems and datasets.<\/p>\n Some call it a \u201creverse acqui-hire.\u201d Others call it poaching. Whatever it\u2019s called, it\u2019s alarming to some in Washington who see it as an attempt to bypass U.S. laws that protect against monopolies.<\/p>\n \u201cI\u2019m very concerned about the massive consolidation that\u2019s going on in AI,\u201d U.S. Sen. Ron Wyden, an Oregon Democrat, told The Associated Press. \u201cThe technical lingo is \u2018up and down the stack\u2019. But, in plain English, a few companies control a major portion of the market, and just concentrate \u2014 rather than on innovation \u2014 trying to buy out everybody else\u2019s talent.\u201d<\/p>\n So-called \u201cacqui-hires,\u201d in which one company acquires another to absorb talent, have been common in the tech industry for decades, said Michael A. Cusumano, a business professor at the Massachusetts Institute of Technology. But what\u2019s happening in the AI industry is a little different.<\/p>\n \u201cTo acquire only some employees or the majority, but not all, license technology, leave the company functioning but not really competing, that\u2019s a new twist,\u201d Cusumano said.<\/p>\n A similar maneuver happened<\/a>\u00a0at the AI company Inflection in March when Microsoft<\/a> hired its co-founder and CEO Mustafa Suleyman<\/a> to head up Microsoft\u2019s consumer AI business, along with Inflection\u2019s chief scientist and several of its top engineers and researchers. That arrangement has already attracted some scrutiny from regulators,\u00a0particularly in Europe<\/a>.<\/p>\n Wyden also wants U.S. regulators to investigate the Amazon-Adept deal. He sent a letter Friday urging antitrust enforcers at the Justice Department and the Federal Trade Commission that \u201csustained, pointed action is necessary to fight undue consolidation across the industry.\u201d<\/p>\n Amazon didn\u2019t immediately respond to a request for comment Friday.<\/p>\n \u201cWhat is going on here is instead of buying startups outright, big tech companies are trying a new play,\u201d Wyden said in an interview before sending the letter. \u201dThey don\u2019t want to formally acquire the companies, avoiding the antitrust scrutiny. I think that\u2019s going to be the playbook until the FTC really starts digging into these deals.\u201d<\/p>\n DOJ and FTC officials didn\u2019t immediately respond to requests for comment on Wyden\u2019s letter.<\/p>\n President Joe Biden\u2019s administration and lawmakers from both parties have championed stronger oversight of the tech industry in recent years, likely scaring off big acquisitions that might have sailed through in earlier eras. U.S. antitrust enforcers, for example, plan on investigating the roles Microsoft<\/a>, Nvidia<\/a> and OpenAI have played in the\u00a0artificial intelligence boom<\/a>, with the Deparment of Justice looking into chipmaker Nvidia and the Federal Trade Commission<\/a> scrutinizing business partners Microsoft and OpenAI.<\/p>\n Tech giants, including Microsoft, Amazon and Google<\/a>, are trying to be conservative and not make too many acquisitions in the AI space, Cusumano said.<\/p>\n \u201cIt seems clever. I would think, though, that they\u2019re not fooling anybody,\u201d he said.<\/p>\n For smaller AI startups, the problem is also that building AI systems is expensive, requiring costly computer chips, power-hungry data centers, huge troves of data to train upon and highly skilled computer scientists.<\/p>\n Adept, which aims to make AI software agents that help people with workplace tasks, said it was trying to do two things at once \u2014 build the foundational AI technology as well as the products for end users. But continuing on that path \u201cwould\u2019ve required spending significant attention on fundraising for our foundation models, rather than bringing to life our agent vision,\u201d it said in a statement explaining the Amazon deal.<\/p>\n \u201cThey may have made a decision that they have no real future and just don\u2019t have deep enough pockets to compete in this space, so they probably prefer to be acquired outright,\u201d Cusumano said. \u201cBut if Amazon is not willing or not able to do that, then this is kind of a second-best approach for them.\u201d<\/p>\n Wyden has long taken an interest in technology, helping to write the 1996 law that\u00a0helped set the ground rules<\/a>\u00a0for free speech on the internet. He said he generally favors a straightforward approach that encourages innovation, with guardrails as needed.<\/p>\n But in the AI industry, he said, \u201ccompanies like Microsoft, Amazon and Google, either own major parts of the AI ecosystem or they have a leg up thanks to their massive resources.\u201d<\/p>\n John F. Coyle, a law professor at the University of North Carolina, said he believes that Amazon hiring Adept employees without buying the company is clearly a move to avoid antitrust problems. But that type of hiring isn\u2019t a \u201creverse acqui-hire,\u201d he said.<\/p>\n Acqui-hires are typically face-saving moves that can be spun into success stories, Coyle said, and provide an alternative to liquidating a business. A smaller company can say it was sold to Amazon or Facebook<\/a> parent Meta Platforms and spin it as a positive, for example, even if wasn\u2019t the founders\u2019 original plan.<\/p>\n \u201cThis isn\u2019t an acqui-hire. This is a straight up poach,\u201d Coyle said of Amazon and Adept.<\/p>\n This doesn\u2019t just happen in the tech world, he said, calling the move \u201ca version of a very old story.\u201d In his class, Coyle said, he teaches students about a case from the 1950s involving an advertising agency in New York City. Some employees left to start a new business and poached roughly 100 others to come to work for them.<\/p>\n \u201cThere are innumerable instances where one company went and raided another to take all their employees,\u201d Coyle said. \u201cThat existed before the acqui-hire, that is going to happen after the acqui-hire.\u201d<\/p>\n<\/div>\nA push for more tech guardrails<\/h2>\n
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