OTTAWA — A recent spate of deals in which tech giants have hired away the top staff of artificial intelligence startups does not yet warrant a “systematic” response from regulators, European Commission antitrust chief Margrethe Vestager said Thursday.

Silicon Valley’s largest firms already have big teams working on AI models and products, and have collectively acquired hundreds of companies. But they’ve framed their latest deals as staffing moves and technology licenses rather than takeovers, an approach critics argue is designed to avoid regulatory scrutiny.

Microsoft went first. In March, the firm announced it had hired away two of the co-founders of Inflection, a California-based startup, to lead its new consumer AI organization. Other top researchers and engineers also made the move. Microsoft reportedly agreed to pay Inflection US$650 million, and got a non-exclusive license to the startup’s so-called foundation models, the kind of AI system that powers chatbots and other generative AI tools.

At the time, Vestager noted the deal and said the European Commission could take regulatory action if it became a trend and if the regulator suspected companies were trying to circumvent merger rules.

There have been at least three more deals since. In June, San Francisco-based Adept announced Amazon had hired its co-founders and licensed its AI models and “agent” technology, which performs workplace tasks on users’ behalf. The tech giant reportedly paid over US$400 million to the startup and its investors. 

In August, Google paid a reported US$2.7 billion to bring on executives and researchers from Character AI, which offers chatbots that mimic human personalities.

Earlier this month, Amazon made a second deal, hiring the co-founders of Berkeley-based Covariant and licensing its robotics-controls models. The startup is by Toronto-headquartered Radical Ventures and the Canada Pension Plan. 

Speaking to The Logic in Ottawa on Thursday, Vestager did not express concern about the “acqui-hire” deals. “We don’t think that it’s a trend that [requires] a more systematic approach,” she said. “For us, it’s still sufficient to do a case-by-case assessment.” 

Some competition advocates argue the tech giants are doing deals this way to evade the attention of antitrust authorities, at a time when regulators in advanced economies have been pursuing the sector’s largest firms over their practices in digital markets. 

But Vestager signalled that acqui-hire deals may not be a workaround. “If it had been a normal, plain-vanilla acquisition of a small company, it’s not a given that we would have taken issue with it,” she said. Large tech firms may be expecting regulators to object and, as a result, are “trying to find a different way” to do deals. “But maybe they take a lot of trouble for no obvious reason.” Or, simply put, regulators will check whether acqui-hire deals are mergers and investigate them accordingly.

The regulator did look into the Microsoft-Inflection deal. The agreement would “transfer Inflection’s position in the markets for generative AI foundation models and for AI chatbots to Microsoft,” the regulator said last week. It ruled that the deal amounted to a merger under EU regulations, because Inflection is getting out of the chatbot business to become an AI studio. 

Still, the regulator isn’t launching a review, after a European Court of Justice ruling in a different case limited EU countries’ ability to refer deals to the Commission for investigation. 

Media commentators have described the four deals as “sort of acquisitions” or “reverse acqui-hires,” a twist on the Silicon Valley tradition of buying companies for their staff. Inflection, Adept, Character AI and Covariant all continue to operate as independent firms under new management. Between them, the startups have raised over US$2.42 billion in capital, according to PitchBook data. 

In filings to the Canadian Competition Bureau, Amazon and Microsoft said large technology companies’ investments in startups helps foster their growth and innovation.

Investors continue to pour money into AI. Globally, firms in the sector raised US$54 billion in 4,117 deals across the first half of the year, according to a recent PitchBook report. But, the report claims that despite such huge sums, the Amazon-Adept and Google-Character AI deals show the huge challenges of scaling valuations for companies building foundation models.