The New A.I. Deal: Buy Everything but the Company

Silicon Valley giants, including Google, Microsoft, and Amazon, are shifting their engagement with A.I. start-ups through innovative deal structures. Rather than outright ownership, they are opting to license technology and recruit top personnel to absorb start-ups' prime assets, all while avoiding ownership. This tactic is reportedly an attempt to avoid regulatory scrutiny while seeking a competitive edge in A.I.

Prominent A.I. researchers Noam Shazeer and Daniel De Freitas, creators of Character.AI, are one such example. They have struck a deal to return to Google with 20% of Character.AI's workforce. Google also agreed to pay $3 billion to license their start-up's technology without owning it.

Similar arrangements are seen across the board: Microsoft paid the A.I. start-up Inflection over $650 million to license its technology and recruit almost all employees. Amazon inked a similar deal with A.I. start-up Adept, paying $330 million for the technology and providing a $100 million retention bonus for Adept employees.

This wave of non-traditional deals in the tech sector is being monitored by the Federal Trade Commission to ensure competition is not being stifled. This comes as part of a broader study of A.I. deals between start-ups and leading tech companies announced earlier this year.

While this new deal structure mirrors traditional acquisition, it allows for start-ups to continue operating independently and for tech giants to circumnavigate regulatory oversight.

- CyberBeat