By Jody Godoy March 18 (Reuters) - Companies’ efforts to sidestep U.S. antitrust scrutiny through tactics such as “acquihires” - a strategy some Big Tech firms use to snap up talent at artificial
DOJ Antitrust Chief Warns Acquihires by Big Tech Are Regulatory Red Flags
By Jody Godoy
Regulatory Concerns Over Acquihires in Big Tech
March 18 (Reuters) - Companies’ efforts to sidestep U.S. antitrust scrutiny through tactics such as “acquihires” - a strategy some Big Tech firms use to snap up talent at artificial intelligence startups - are a “red flag,” the top U.S. antitrust enforcer told Reuters on Wednesday.
Understanding Acquihires and Their Impact
Acquihires, where the world's biggest technology firms pay large sums in deals with promising startups to take their technology and talent, but stop short of formally acquiring the target, are increasingly being viewed by antitrust regulators as an attempt to evade merger rules. In one recent example, Nvidia in December agreed to license chip technology from startup Groq and hire its CEO, without buying the company.
How Acquihires Circumvent Merger Review
When companies make acquisitions, they hand over information about a proposed transaction to federal antitrust enforcers. "Acquihires" allow companies to essentially absorb other firms without going through that formal merger review process.
DOJ Perspective on Circumvention Tactics
"When I see conduct that appears aimed to circumvent that process, as a litigator, as an enforcer, that's more of a red flag to me than if you had just participated and complied" with the review process, said Acting Assistant Attorney General Omeed Assefi.
Encouraging Compliance with Merger Reviews
He said companies should be willing to engage in the merger review process. That way, the DOJ can quickly understand and address any concerns, or, if the deal has no competitive issues, end its review early and let the deal close, he said.
Ongoing Investigations and Confidentiality
Assefi declined to discuss ongoing matters or particular companies.
(Reporting by Jody Godoy; editing by David Gaffen)
