Big tech companies focus on acquihires to gain startup talent

[Photo by Reuters / Yonhap]

Global technology companies are engaged in acquihiring, a term that combines acquisition and hiring, in an effort to gain startup talent.

According to TechCrunch and The Information on Saturday, local time, Google announced that it is hiring Noam Shazeer and Daniel De Freitas, founders of Character.AI, and their fellow AI researchers.

Character.AI investors’ shares are being bought at $88 per share, which values Character.AI at about $2.5 billion. Character.AI will continue to exist as it is as will provide services to Google, receiving licensing fees in return.

In a similar move, Microsoft Corp. announced in March that it hired two of the three founders of Inflection AI, including Mustafa Suleyman, and other employees.

Talent acquisition or acquihires refer to a corporate practice of acquiring a company primarily to recruit its employees, rather than to gain control of its products or services.

As found in the recent acquihires between big tech companies and startups, talent acquisitions benefit both AI startups and big tech firms.

AI startups can survive by being part of big tech, avoiding the high costs of independent operation. Big tech firms, in turn, gain access to valuable talent and promising technologies.

Some critics, however, argue that the latest talent acquisition between Google and Character.AI is another example of how harsh the realities are for many AI startups. Despite substantial investments, many AI startups end up being acquired by bigger competitors.

In addition, regulatory bodies in the United States and the United Kingdom, including the U.S. Federal Trade Commission (FTC) and U.K. Competition and Markets Authority (CMA), said they would scrutinize the recent acquihires closely, as the authorities see some big tech hiring key people from startups as trying to avoid regulatory oversight.