FTC is looking into Amazon’s deal with AI startup Adept

The US Federal Trade Commission (FTC) has sought details from Amazon about the recruitment of key personnel from the AI startup Adept, according to a Reuters report.

The request follows the announcement that Adept CEO David Luan, along with other top executives, will be joining Amazon, which is also set to license some of Adept’s technologies.

This underscores the growing scrutiny by the FTC and other regulatory bodies worldwide on AI-related deals, especially partnerships between major technology companies and leading AI startups.

Earlier this week, the UK’s Competition and Markets Authority (CMA) announced an inquiry into a similar move by Microsoft, which recruited most of the employees from startup, Inflection, for its consumer AI group. In June, the FTC too had launched an investigation to determine whether there actually was an undisclosed acquisition through the hiring of key personnel and the licensing agreement with Inflection.

AI growth amid scrutiny

Expanding AI capabilities has become inevitable for tech companies. Faisal Kawoosa, chief analyst at Techarc, pointed out that Amazon has been lagging in its AI journey compared to other big tech companies, necessitating a search for inorganic growth strategies.

“We’ve seen a similar approach with Apple, which acquired a startup like DarwinAI due to uncertainties in their ecosystem,” said Kawoosa. “As for this investigation, it appears to be preliminary to determine if it warrants a deeper look. Regulators are assessing whether anything in this transaction violates trade practices.”

This could further raise concerns for companies considering partnerships with the likes of Amazon, as regulatory hurdles can be daunting, said Thomas George, president of Cybermedia Research. The main concerns involve information privacy, copyright infringement, and antitrust issues.

“This forces organizations to think critically to avoid legal risks, especially when handling sensitive customer data or formulating contracts that do not give one company too much influence over the market,” George said. “Given prevailing trends, regulatory bodies like the FTC require a forward-thinking approach to compliance to ensure partnerships align with shifting regulations through transparency.”

Impact of regulatory intervention

Given its benefits, the trend of integrating AI startups will likely continue, with both deep tech and big tech companies trying to enhance their capabilities and quickly develop their large language models.

For instance, Kawoosa pointed out that such acquisitions provide Amazon with rapid access to advanced AI technologies. The widespread use of AWS enables Amazon to offer enhanced AI services to its many enterprise customers.

This could naturally lead to increased regulatory scrutiny in the industry. The bigger issue would be the two-fold impact on AI innovation and adoption in enterprises. On one hand, this might slow down aggressive acquisition strategies as companies navigate regulatory landscapes.

“On the other, this could create a better competitive environment by preventing market monopolization and ensuring smaller AI innovators can compete and collaborate within the ecosystem on equal footing,” George said. “Finally, while such scrutiny could pose some obstacles in the near term, it can foster a more diverse and robust innovation landscape that would benefit the entire industry, thereby facilitating the equitable development of AI technologies.”