Big tech's new 'acquisition' playbook

Good morning,

Today, we’ll discuss how Microsoft and Amazon’s reverse acquihire of AI startups could be a new pattern in Silicon Valley as a way to skirt antitrust laws. Plus, other tech news you need to know from this week. Let’s go 👇

This week’s insight

What happened

Amazon announced that it's hiring most of the team behind Adept, an OpenAI competitor that’s raised about $400M from top-tier investors. It’ll employ close to 66% of Adept’s employees, including its cofounders. 

Amazon will also license Adept’s technology to “accelerate its roadmap for building digital agents that can automate software workflows.”

Why?

The problem with big tech is that they’re no longer allowed to buy companies like they used to due to strict antitrust laws. So, by conducting a reverse acquihire (the hiring of people with a corresponding licensing deal), the company can disguise this ‘acquisition’ as something else.

How Adept benefits

According to Adept’s corporate blog post; it was running out of money. It had plans to build useful general intelligence and an enterprise agent product—both would’ve required significant capital investment for its models.

The startup has been looking to sell itself for the past few months. The reality is that building leading AI models is extremely costly and raising $400M isn’t even enough to compete these days, especially with big tech. 

By going to Amazon, the founders won’t have to worry about fundraising and can focus on building AI technology.

Amazon copied Microsoft

What Amazon did looks very similar to what Microsoft did earlier this year. Microsoft agreed to pay Inflection, another OpenAI competitor, $650M to license its models and hire most of its staff, including its cofounders.

Bottomline

Capitalism seems to always find a way. What Microsoft and Amazon did could be the new playbook for big tech companies to take over the AI industry and get away with it… for now. 

Reid Hoffman, who co-founded OpenAI and sits on the board of Microsoft, even said himself that what Microsoft did with Inflection will become a “pattern” for future AI deals.”  And this was before Amazon’s recent deal with Adept.

This week’s videos

• How AI is another tech déjà vu

• Why Ilya Sutskever left OpenAI

Top news

• Amazon’s CEO Andy Jassy celebrates his 3rd anniversary as the company’s chief. He’s taken the company to a record $2 trillion market cap. 

• A new app called “noplace” has surged to the top of the App Store as it launched out of invite-only mode Wednesday.  It’s a mashup of X and Myspace for Gen Z.

• A recent cybersecurity data breach at Evolve Bank & Trust significantly impacted several fintech companies like Affirm and Wise. The ransomware gang LockBit was responsible for this incident.

Other news

• Meta’s Threads app reaches 175 million monthly active users just as it hits its first anniversary.

• Google’s emissions of greenhouse gasses rose 13% in 2023 on increased data center energy due to its AI spending binge.

• Meta launches Meta 3D Gen, a new AI system that creates high-quality 3D assets from text descriptions in less than a minute.

• The upcoming Google Pixel 9 series will introduce new machine learning abilities under the branding of Google AI.

• SpaceX wants to launch its Starship mega-rocket up to 120 times a year from Florida.

• Tesla vehicle deliveries fell short for the second quarter in a row but beat Wall Street’s estimates. 

• OpenAI has added Apple executive Phil Schiller to its board as an observer as part of the Apple-ChatGPT partnership. Schiller will join Microsoft executive Dee Templeton as a board observer.

• Meta is changing the way it labels AI content. Previously, it said the image was “Made with AI.” Now, the label will say “AI info” in which users can click for more information.

• Circle, the issuer of the US dollar-pegged stablecoin USDC and euro-pegged EURC gets approval to offer these stablecoins under the new EU crypto regulations.

• EU regulators charge Meta for its “pay or consent” advertising model in Europe which fails to comply with the Digital Markets Act.

• OpenAI hires Zapier’s Chief Revenue Officer Giancarlo Lionetti to lead its sales strategy. 

• Amazon licenses tech from AI startup Adept and hires its cofounders, mirroring the Microsoft-Inflection deal that occurred earlier this year.

Deal flow

• Amazon will acquire a minority stake in a new company formed by the merger of Saks Fifth Avenue’s parent company, HBC, and Neiman Marcus, which HBC is buying for $2.56 billion.

• SoftBank discusses plans to invest $10B in power-related projects.

• Jeff Bezos plans to sell about $5B worth of his stake in Amazon after its stock hit a record high. This is his second major round of share sales this year

• AI coding startup Magic is in talks to raise more than $200M at a $1.5B valuation.

• Prodia, a provider of a distributed network of GPUs for AI inference solutions, raised a $15M seed round.

• Developer productivity startup Pieces, raised a $13.5M Series A round.

• Bankrupt EV maker Fisker seeks Delaware Bankruptcy Court approval to sell its remaining all-electric Ocean SUVs for an average of $14,000 each.

• Runway, an AI text-to-video startup is in talks to raise $450M at a $4B valuation.

• Robinhood has agreed to acquire AI research platform Pluto Capital to bring more intelligent, data-driven investing.

• VC firm Benchmark plans to raise $425M from limited partners for its next fund called “Benchmark 1” to denote the new era of generative AI.

• Boeing agreed to acquire key supplier Spirit AeroSystems in a $4.7B all-stock deal to improve its plane quality and safety.

Was this forwarded to you?

That’s it for this week. I hope it was insightful. As always, let me know what you think and if you have any questions. Cheers!

🌜 Loryn from Dark Mode Digest