U.S. senator calls for investigation of big tech companies' poaching of artificial intelligence talent

[New Sancai Compilation First Release] In the race to stay ahead in the field of artificial intelligence, the largest technology companies are gobbling up the talent and products of innovative artificial intelligence startups without formally acquiring them.

Now, three members of the U.S. Senate are calling for an investigation.

San Francisco-based Adept announced a deal late last month to send its chief executive and key employees to Amazon and license Adept's artificial intelligence systems and data sets to the e-commerce giant.

Some call it a "reverse takeover for hire." Others call it "poaching." Whatever it's called, it has alarmed some in Washington, who see it as an attempt to get around U.S. laws that prevent monopolies.

"I'm very concerned about the massive consolidation that's happening in artificial intelligence," said Sen. Ron Wyden, D-Ore. “The technical term is ‘stack up and down.’ But, simply put, a handful of companies control the majority of the market and are focused solely on trying to acquire the talent of others rather than innovate.”

Michael A. Cusumano, a business professor at MIT, said so-called “acquisition hiring,” in which one company acquires another to absorb talent, has been a common practice in the technology industry for decades. common. But the situation in the artificial intelligence industry is somewhat different.

"Licensing some of the employees or most, but not all, of the technology and keeping the company going without really competing is a new twist," Cusumano said.

A similar situation occurred at artificial intelligence company Inflection in March 2024, when Microsoft hired its co-founder and CEO Mustafa Suleyman as well as Inflection's chief scientist and several top engineers and researchers to lead Microsoft's consumer artificial intelligence Smart business. This arrangement has attracted some scrutiny from regulators, particularly in Europe.

Wyden also wants U.S. regulators to investigate Amazon's deal with Adept. He and Democratic Sens. Elizabeth Warren of Massachusetts and Peter Welch of Vermont sent a letter on July 12 urging antitrust enforcers at the Justice Department and the Federal Trade Commission "must take Sustained, targeted action to combat inappropriate consolidation across the industry.”

Wyden said in an interview before sending the letter: "What is happening now is that instead of directly acquiring startups, large technology companies are trying new ways of playing." They do not want to formally acquire these companies to avoid antitrust scrutiny. I think that's going to be the playbook before the FTC really starts digging into these deals. "

The Justice Department and the Federal Trade Commission said they received the senators' letter but declined further comment.

In recent years, President Joe Biden's administration and lawmakers from both parties have advocated for greater regulation of the tech industry, which could scare away large acquisitions that might have gone smoothly in the early stages. For example, the U.S. antitrust enforcement agency plans to investigate the role of Microsoft, Nvidia and OpenAI in the artificial intelligence boom, the Department of Justice investigates chip manufacturer Nvidia, and the Federal Trade Commission examines close business partners Microsoft and OpenAI.

Cusumano said tech giants including Microsoft, Amazon and Google are trying to remain conservative and not make too many acquisitions in the field of artificial intelligence. "It seems pretty smart. But I don't think they're trying to fool anyone," he said.

For smaller AI startups, the problem is also that building AI systems is expensive, requiring expensive computer chips, power-hungry data centers, vast amounts of training materials and highly skilled computer scientists.

Adept, which aims to develop artificial intelligence software agents that help people complete tasks in the workplace, said it is trying to do two things at the same time - build foundational artificial intelligence technology and provide products for end users. But continuing on this path "requires significant effort in raising capital for our model rather than delivering on our agency vision," it said in a statement explaining the Amazon deal.

"They may have decided that they have no real future and don't have the wherewithal to compete in this space, so they may prefer to be acquired outright," Cusumano said. "But if Amazon is unwilling to acquire, then that's a big deal for them. It’s a sub-optimal approach.”

Wyden has long been interested in technology and helped draft the 1996 law that set out ground rules for free speech online. He said he generally prefers a direct approach to encourage innovation, putting up guardrails as needed.

But in the artificial intelligence industry, he said, "Companies like Microsoft, Amazon and Google either own major parts of the artificial intelligence ecosystem or have an advantage due to their vast resources." The letter asks law enforcers to examine how the technology giants " "Through partnerships, equity transactions, acquisitions, cloud computing credits and other arrangements" to solidify its artificial intelligence dominance.

John F. Coyle, a law professor at the University of North Carolina, said he believed Amazon's hiring of Adept employees without acquiring the company was a clear move to avoid antitrust issues. But he said that this kind of recruitment is not "reverse takeover recruitment."

Coyle said acquisitive hiring is often a face-saving move that can turn into a success story and provide an alternative to liquidating a business. For example, a smaller company could say it was sold to Amazon or Facebook parent Meta Platforms and view it as a positive, even if it wasn't the founder's original plan.

"This is not an acquisition to hire. This is a direct poaching," Coyle said of Amazon and Adept.

He said this doesn't just happen in the tech world, calling the move "a version of a very old story." Coyle said he teaches students in class a case involving a New York City advertising agency from the 1950s. Some employees left to start new companies and poached about 100 employees to work for them.

"There are countless examples of one company raiding another company and taking away all the employees. This happens before the acquisition hire, and it happens after the acquisition hire," Coyle said.

(Compiled by: Wang Jimin)

(Editor: Jiang Qiming)

(Source of the article: Compiled and published by New Sancai)