Global big tech corporations are securing talent in the field of artificial intelligence (AI) by extracting only founders and key researchers instead of acquiring startups themselves. While this may allow corporations to secure competitiveness in the short term, there are concerns that it could weaken the innovative drive of Silicon Valley in the long run.
According to the Wall Street Journal (WSJ), major tech corporations such as Microsoft (MS), Google, and Meta have been employing a so-called "reverse acquisition" strategy to absorb the core workforce of promising startups. Previously, big tech corporations sought long-term growth by acquiring entire promising startups. Notable examples include Google's acquisition of Android in 2005 and Amazon's acquisition of the Israeli semiconductor startup Annapurna Labs in 2015.
However, recently corporations have been either scouting only the founders and some researchers or absorbing key assets through expensive technology licensing agreements. For example, MS attracted the CEO of the generative AI developer Inflection AI, Mustafa Suleyman, last year and paid an expense of $650 million (approximately 899.3 billion won) while delegating the management of the conversational AI project Copilot.
Meta established a new AI development organization called "Superintelligence Lab" that attracts top AI talent from around the world while also making a large investment to acquire 49% equity in the data labeling startup Scale AI.
This approach is interpreted as a rational response from big tech. It allows them to bypass the complex integration processes associated with large mergers and avoid antitrust regulations imposed by authorities. Most importantly, in a situation where the technological leadership is constantly shifting, corporations can quickly secure competitiveness. There is also the advantage that promising talent from startups can lead to large salary increases.
However, there are also significant shadows. Some workers are receiving professional athlete-level salaries, and as they leave their jobs, investors are experiencing lower-than-expected revenue, leading to a polarization in the job market. Big tech corporations are accelerating restructuring in areas with interchangeable personnel or where distinct results are not being produced. In February, Meta laid off about 5% of its workforce, approximately 3,600 employees, while MS also undertook layoffs of around 6,000 in May. Scale AI also initiated personnel restructuring shortly after receiving investment from Meta.
There are points being raised that the foundational spirit of Silicon Valley is being shaken by these changes. As promising talent prefers stable employment at big tech corporations instead of challenging themselves at startups, the pool of adventurous talent is narrowing, which may, in the long term, dry up the sources of innovation. Industry analysts are already noting that the trust in the belief that "if successful, everyone shares in the rewards" has collapsed, leading employees to be trapped in the pursuit of short-term results.
John Sakoda, founder of the venture capital firm Decibel, said, "The underlying belief in Silicon Valley that 'if successful, we all get rewarded' was present when talented individuals took on seemingly reckless challenges," adding that "big tech companies are threatening the 'golden goose.'"