The U.S. Federal Trade Commission is scrutinizing a growing practice in which large technology companies hire key employees and license technology from startups instead of acquiring the startups outright. FTC Chairman Andrew Ferguson said the agency is beginning to examine these “acqui-hires” to ensure they are not an attempt to get around the FTC’s merger review process, since the structures can deliver access to talent and technology without a traditional acquisition filing.
Recent examples include Nvidia’s licensing arrangement with startup Groq alongside the hiring of its CEO, Jonathan Ross, as well as a $650 million deal billed as a licensing fee that brought Microsoft’s top AI executive on board. Meta also paid about $15 billion to hire Scale AI’s CEO without acquiring the company, and Amazon has hired founders from Adept AI. Ferguson said companies ramped up the practice in response to aggressive antitrust enforcement under the Biden administration.
