It sounded like something that should have come from the sports desk — a $14.3 billion transfer fee for a young up-and-coming prospect as Meta Platforms Inc. looks to rebuild its team for the tough season ahead. The head coach is an under-pressure Mark Zuckerberg, and the hot talent is Alexandr Wang, 28. His company is Scale AI, and Meta is taking a 49% stake, it was confirmed last week.
Were this an acquisition, it would be the second largest in Meta’s history after its $19 billion purchase of WhatsApp in 2014. But it’s not an acquisition, so don’t call it that, even though it bears many of the hallmarks of one.
Wang is going to join Meta as a top executive tasked with running a crack team to build an AI superintelligence, sitting next to Zuckerberg at Meta’s headquarters. Other Scale AI employees will join, too, according to multiple reports. So — definitely not an acquisition, just an investment that also includes putting the the company’s top talent on Meta’s payroll. Meanwhile, Meta has been trying to poach AI talent from Google and OpenAI with the promise of “seven- to nine-figure” salaries, the New York Times reported.
In its defense, Meta is hardly a pioneer here. As Bloomberg Tech’s Jackie Davalos mentioned in her analysis, this kind of squad building is becoming a regular occurrence. Microsoft Corp. signed Inflection AI’s co-founders; Alphabet Inc. hired Character.AI’s founders; Amazon.com Inc. took on Adept AI’s chief executive officer. On none of these occasions did they acquire the actual companies.
Two forces are driving this approach. The first, glaringly, is that the big companies are particularly keen to avoid being seen to be making acquisitions right now when judges are deep in consideration over whether earlier actions, such as Meta’s purchases of Instagram and WhatsApp, should be deemed illegal. For Meta, structuring the Scale AI deal as an investment means avoiding a long, turbulent timeline that would come with a buyout effort.
But the second factor is what I find more interesting. Ever since the launch of ChatGPT, there’s been no shortage of soul-searching among big tech firms as to why they didn’t get there first. How could it be that the pioneering work was done outside of their campuses by individuals and companies with relative pennies compared with their R&D budgets? The reason, as evidenced by these hirings and investments, is the very nature of bigness. Now that the big tech companies are mature businesses, never has their inability to move quickly and take risks been more apparent.
