Three Democratic senators sent a letter to the FTC and DOJ this week demanding enforcement action against what they're calling "reverse acqui-hires." These are deals where big tech companies hire away an AI startup's entire leadership team while licensing its technology, without filing the merger paperwork that would trigger antitrust review. The letter names Google, Microsoft, Amazon, Nvidia, and Meta. FTC Chairman Andrew Ferguson has already said his agency is "beginning to look very closely at how these things work."
If you're an AI startup founder fielding offers from strategic acquirers, or a tech company looking to bring in AI talent through unconventional structures, the rules just changed. Deals that closed quietly in 2024 are now under federal investigation. And the enforcement theories these agencies are developing will shape how every AI talent transaction gets structured going forward.
What Happened
On February 4, 2026, Senators Elizabeth Warren, Ron Wyden, and Richard Blumenthal sent a letter to the FTC and DOJ urging the agencies to "carefully scrutinize these deals and block or reverse them should they violate antitrust law." The letter warns that if the pattern continues, "it will undoubtedly harm competition and stifle innovation in the emerging AI industry."
The target: a deal structure that emerged in 2024. Instead of acquiring an AI company outright, big tech firms pay substantial licensing fees for the startup's technology while simultaneously hiring away most or all of the founding team. The startup continues to exist on paper. But its competitive capacity is gutted.
This follows comments FTC Chairman Ferguson made on January 16, 2026, when he said the agency would review whether acquihire deals are "being constructed to try to escape Hart-Scott-Rodino review." Ferguson attributed the creative structuring to companies trying to avoid the Biden administration's aggressive merger enforcement, adding that such workarounds "aren't necessary anymore" under current FTC leadership.
That last part is worth pausing on. Ferguson is essentially telling tech companies: we'll give you a fair shake on real acquisitions, so stop with the workarounds.
The Deals Under Scrutiny
These transactions share a pattern: big payments paired with mass hiring, structured to stay below or outside merger notification requirements.
Microsoft/Inflection AI (March 2024): Microsoft paid $650 million to license Inflection's technology and hired nearly the entire 70-person team, including CEO Mustafa Suleyman, who now leads Microsoft AI. No HSR filing.
Google/Character.AI (August 2024): Google paid $2.7 billion for a non-exclusive technology license and hired back co-founder Noam Shazeer (a former Google researcher) along with key team members. The DOJ opened a formal investigation by mid-2025.
Amazon/Adept AI (June 2024): Amazon paid a $25 million licensing fee and hired roughly two-thirds of Adept's employees, including CEO David Luan. The deal is reportedly under regulatory investigation.
Google/Windsurf (Recent): Google's DeepMind paid approximately $2.4 billion to acquire the CEO, select team members, and licensing rights for agentic coding technology.
Add up these and similar transactions, and tech giants have deployed over $40 billion through these structures in the past two years. All while avoiding the federal merger review process that would normally apply to acquisitions of this size.
That's a lot of consolidation flying under the radar.
Why This Matters Now
The agencies have two distinct enforcement theories, and both could apply to your next deal.
The Procedural Theory: You Should Have Filed
The Hart-Scott-Rodino Act requires pre-merger notification for transactions above certain dollar thresholds. That's currently $133.9 million as of February 17, 2026. (We covered the new HSR thresholds and filing fees in detail yesterday.) But the obligation isn't limited to stock purchases. It can apply to asset acquisitions, including intellectual property and, potentially, the coordinated transfer of a company's key personnel.
Under 16 C.F.R. § 801.90, parties can't structure transactions specifically to escape HSR reporting obligations. If the FTC concludes that a licensing-plus-hiring deal is economically equivalent to an acquisition, the failure to file could be a violation.
The civil penalty for HSR non-compliance runs over $54,000 per day. For a deal that closed eighteen months ago, the math gets uncomfortable fast. And unlike traditional gun-jumping violations where companies jump ahead before the waiting period ends, these cases involve deals that may never have been filed at all. The agencies can also investigate non-reportable deals under their broader antitrust authority regardless of whether HSR technically applied.
The Substantive Theory: This Is Anti-Competitive
Even if a deal didn't require HSR filing, it can still violate the antitrust laws. FTC Commissioner Mark Meador put it bluntly: "firms may acquire talent not to utilize it productively but to preempt rivals from accessing it. In other words: buy and kill, but for ultra-skilled labor."
That framing matters. The theory is that these transactions function as acquisitions of nascent competitors. The startup loses its ability to compete. Not because it was formally acquired, but because its human capital and intellectual property have been absorbed by an incumbent. The competitive harm is the same whether the structure is a merger or something more creative.
This "nascent competitor" theory has been controversial when applied to traditional acquisitions. But acquihires may present an easier case. If a company pays billions of dollars and hires an entire founding team, then claims the arrangement isn't acquisition-like, the argument writes itself.
The International Dimension
U.S. regulators aren't alone here. The UK's Competition and Markets Authority announced investigations into Microsoft/Inflection, Amazon/Anthropic, and Microsoft/Mistral in April 2024. Brazil's CADE launched parallel investigations in September 2024. The European Commission is encouraging member states to refer below-threshold deals for EC review.
A deal structured to avoid U.S. merger review might still face mandatory notification abroad. A finding of anti-competitive conduct in another jurisdiction can complicate U.S. enforcement even if the agencies hadn't focused on a particular transaction.
What This Means for Deal Terms
If you're negotiating an AI talent deal on either side, the contract terms need to account for regulatory risk that didn't exist eighteen months ago.
For Sellers and Startups
The acquihire structure was attractive to founders because it provided liquidity while avoiding the complexity of a formal sale process. That calculus has shifted.
The risk has moved. If the deal is later characterized as an unreported acquisition, both parties face potential liability. Your purchase agreement should address who bears the cost of responding to an FTC investigation, who controls the response, and what happens if the agency requires modifications to the arrangement.
The consideration may need restructuring too. Large upfront payments combined with mass hiring are exactly what's drawing scrutiny. Deals that spread compensation over time, maintain genuine operational independence, or involve only a subset of the team may face less exposure. But they also deliver different economics.
And investors have new questions. If you're raising a round after an acquihire, expect diligence on the structure. "We licensed the technology and people left voluntarily" is a story that now requires documentation.
For Buyers and Acquirers
The era of creative structuring as a substitute for traditional M&A may be closing.
Chairman Ferguson's message to tech companies was explicit: you don't need workarounds anymore because "at the FTC under the Trump administration, you get a fair shake." The implicit message is that the agency expects companies to use the normal process. It will look skeptically at deals that appear designed to avoid it.
If you're acquiring AI capability through talent and licensing, document the business rationale in detail. If the deal doesn't require HSR filing, prepare a contemporaneous analysis explaining why. Build in contractual flexibility to address regulatory inquiries that may come months or years later.
For Investors
Acquihire risk is now a diligence item. If a portfolio company was the target of one of these deals, understand the structure and the potential exposure. If a portfolio company is the acquirer, confirm they've assessed HSR obligations and have a defensible position.
Board members should be asking about these structures in M&A committee discussions. "We're not technically acquiring the company" is no longer a complete answer.
Practical Takeaways
If you're a startup in acquihire discussions: Require the buyer to provide a written HSR analysis before signing. Make sure indemnification provisions address regulatory enforcement risk. Consider whether a cleaner traditional acquisition might be preferable despite the added process.
If you're a tech company acquiring AI talent: Document the business purpose for the structure you choose. If HSR doesn't apply, memorialize the analysis in a privileged memo now, not when the agency calls. If HSR does apply, understand the current fee structure before budgeting the deal. Assess whether international filings are required even if U.S. filing isn't.
If you have a deal from 2024 that used this structure: Review your exposure. The DOJ investigation into Google/Character.AI started in mid-2025, well after the deal closed. Have outside counsel assess your situation before the agency makes contact.
If you're on the board of a company involved in these deals: Ask whether the structure has been reviewed in light of recent enforcement signals. Confirm that the company has a response plan if regulators inquire.
If you're an investor in AI companies: Add acquihire structure to your diligence checklist for both targets and acquirers. Understand the regulatory risk profile of any company that has been part of these transactions.
What We're Watching
FTC guidance on acquihire structures. Chairman Ferguson indicated the agency may issue guidance "within months" on how it views these deals under HSR. This will provide clearer rules but may also trigger enforcement against past transactions.
DOJ Google/Character.AI investigation. The outcome will signal how aggressive the agencies are willing to be on the substantive antitrust theory. A consent decree requiring structural changes would have immediate implications for other deals.
FTC AI policy statement due March 11, 2026. The FTC is required to issue guidance on how the FTC Act applies to AI. This may address competitive concerns beyond acquihires, but the timing suggests the issues are connected.
International enforcement coordination. Watch for parallel actions from UK, EU, and Brazilian authorities. Coordinated enforcement would make these structures untenable globally.
Tech company behavior. If major tech firms shift back to traditional acquisition structures with full HSR filings, that's a signal they've concluded the creative approach is no longer worth the risk.
The Path Forward
The acquihire playbook that worked in 2024 is under direct attack. Three senators are demanding enforcement. The FTC chairman has said his agency is investigating. The DOJ has an active inquiry into at least one major deal. International regulators are piling on.
That doesn't mean talent deals are dead. It means they need to be structured with regulatory reality in mind. For some transactions, that will mean traditional acquisitions with proper HSR filings. For others, it may mean genuinely limited arrangements: licensing that doesn't strip the target of competitive capacity, hiring that doesn't hollow out the company.
The worst position is having closed a deal eighteen months ago without considering these issues and now waiting to see if the agency calls. If that's you, get ahead of it. Assess your exposure, prepare your response, and don't get caught flat-footed.
The era of $40 billion in unreviewed AI consolidation appears to be ending. Plan accordingly.