A few months ago, I was sitting in the audience at a tech conference in San Francisco and watching BloombergEmily Chang interview with Reid Hoffman.
She asked about Microsoft’s hiring of the team behind Inflection, a potential OpenAI competitor that Hoffman co-founded. It was an acquisition in all but name, clearly designed to avoid scrutiny from antitrust regulators. Not only did Microsoft (of which Hoffman is a board member) hire most of Inflection’s employees, it also licensed the startup’s technology in a way that seemed designed to compensate its investors.
Speaking with Chang that day on stage, Hoffman predicted that what happened at Inflection would become a “model” for future AI contracts. We’re seeing that model come to fruition right now.
Last Friday, Amazon announced that it was hiring most of the team behind Adept, another potential OpenAI competitor that has raised about $400 million from top investors to build, in the words of CEO David Luan, “a new kind of giant model that turns natural language into actions on your machine.”
Amazon said GeekWire‘s Taylor Soper announced that it was hiring 80% of Adept’s employees, including Luan and his co-founders. In an internal memo published by the outlet, Senior Vice President Rohit Prasad said that, like Microsoft with Inflection, Amazon would also license Adept’s technology to “accelerate our roadmap to create digital agents that automate software workflows.”
Adept’s corporate blog on the news suggests the company was running out of money: “Pursuing Adept’s original plan to create both useful general information and an enterprise agent product would have required devoting significant attention to fundraising for our foundation models, rather than bringing our agent vision to life.” Recent reports indicate the company is looking to sell itself.
The reality is that building cutting-edge AI models is extremely expensive, and raising $400 million isn’t even enough to compete right now. Big tech companies, meanwhile, are flush with cash and looking to get in on what everyone perceives as the next big thing. It makes sense that more AI startups will follow in the footsteps of Inflection and Adept as the industry consolidates.
The problem for big tech companies is that they’re no longer allowed to buy companies the way they used to. The current antitrust regime would almost certainly try to block an Amazon acquisition of Adept, whether or not there was a strong legal case for doing so. (Amazon executives are still furious that they’re not allowed to buy a robot vacuum company.)
Still, capitalism always finds a way. What Microsoft did to Inflection, and what Amazon just did to Adept, is the new model for Big Tech’s strategy to swallow up the AI industry and get away with it. Silicon Valley has a long history of acquisitions, where a startup is gutted of its employees and left for dead. Microsoft and Amazon have done what are essentially reverse acquisitions, where hiring people and a corresponding licensing deal are designed to disguise what is really an acquisition.
Reid Hoffman, meanwhile, should probably be commended for more than just accurately predicting the future of these deals—one of Adept’s early investors was none other than his venture capital firm, Greylock.
