By Jody Godoy
(Reuters) -Facebook owner Meta’s $14.8 billion investment in Scale AI and hiring of the data-labeling startup’s CEO will test how the Trump administration views so-called acquihire deals, which some have criticized as an attempt to evade regulatory scrutiny.
The deal, announced on Thursday, was Meta’s second-largest investment to date. It gives the owner of Facebook a 49% nonvoting stake in Scale AI, which uses gig workers to manually label data and includes among its customers Meta competitors Microsoft and ChatGPT creator OpenAI.
Unlike an acquisition or a transaction that would give Meta a controlling stake, the deal does not require a review by U.S. antitrust regulators. However, they could probe the deal if they believe it was structured to avoid those requirements or harm competition.
The deal appeared to be structured to avoid potential pitfalls, such as cutting off competitors’ access to Scale’s services or giving Meta an inside view into rivals’ operations – though Reuters exclusively reported on Friday that Alphabet’s Google has decided to sever ties with Scale in light of Meta’s stake, and other customers are looking at taking a step back.
In a statement, a Scale AI spokesperson said its business, which spans work with major companies and governments, remains strong, as it is committed to protecting customer data. The company declined to comment on specifics with Google.
Alexandr Wang, Scale’s 28-year-old CEO who is coming to Meta as part of the deal, will remain on Scale’s board but will have appropriate restrictions placed around his access to information, two sources familiar with the move confirmed.
Large tech companies likely perceive the regulatory environment for AI partnerships as easier to navigate under President Donald Trump than under former President Joe Biden, said William Kovacic, director of the competition law center at George Washington University.
Trump’s antitrust enforcers have said they do not want to regulate how AI develops, but have also displayed a suspicion of large tech platforms, he added.
“That would lead me to think they will keep looking carefully at what the firms do. It does not necessarily dictate that they will intervene in a way that would discourage the relationships,” Kovacic said.
Federal Trade Commission probes into past “aquihire” deals appear to be at a standstill. Under the Biden administration, the FTC opened inquiries into Amazon’s deal to hire top executives and researchers from AI startup Adept, and Microsoft’s $650 million deal with Inflection AI. The latter allowed Microsoft to use Inflection’s models and hire most of the startup’s staff, including its co-founders.
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