South Korea will bar large companies from using so-called acqui-hires — a blend of "acquire" and "hire" — to sidestep antitrust rules such as merger reviews by poaching the core staff of promising startups. On paper the deals look like job changes, but regulators say they deliver the effect of a merger or acquisition through the back door.
The Fair Trade Commission said on the 9th that it will give public notice of a revised version of its merger filing guidelines through the 30th. Under current law, it has been difficult to determine whether a transaction qualifies as a business combination when the buyer does not directly acquire shares or a business unit. Once the revision takes effect, cases in which core personnel move as a group and carry on an existing business will also be subject to merger review.
Behind the revision is the talent war among U.S. Big Tech firms. For artificial intelligence startups, people and technology are often more central to the business than factories or equipment. The departure of a founder and a handful of key researchers can produce much the same effect as buying the entire company. That has led to a steady stream of deals in which an acquirer pays a fee to secure only the key personnel and technology rather than purchasing the company outright — an approach that avoids traditional merger scrutiny by regulators.
A prominent example is Microsoft's deal with Inflection AI. Instead of acquiring Inflection AI outright in 2024, Microsoft hired most of its key personnel, including co-founders Mustafa Suleyman and Karen Simonyan, and simultaneously signed a licensing agreement giving it access to the company's AI technology. The deal was reported at $650 million.
Although no acquisition took place, Britain's Competition and Markets Authority treated Microsoft's hiring of Inflection AI staff and the related agreements as a merger case, concluding that a substantial part of the business had effectively been transferred as the staff and technology moved to Microsoft. The CMA ultimately cleared the deal, finding no risk that the combination would restrict competition.
Google carried out a similar deal with Character.AI. In 2024 it hired co-founders Noam Shazeer and Daniel De Freitas along with some other employees, and at the same time signed a non-exclusive license for Character.AI's models. Google disclosed the value of the transaction at $2.7 billion. Without buying the company, it secured the founders, key personnel and technology all at once.
Meta last year bought a 49% stake in data-labeling firm Scale AI for about $14.3 billion and brought founder and Chief Executive Officer Alexandr Wang into its own AI organization. While it did not take full control of Scale AI, a large equity investment and the hiring of key personnel took place at the same time.
These are precisely the transactions the FTC now intends to examine as business combinations. Under the revision, if core personnel move as a group and the acquiring side becomes able to conduct the existing business, regulators may find that a "major part of the business" has been transferred. The commission will also take a broader view of what counts as consideration for such a transfer, including compensation for the personnel move, payments made in exchange for waiving rights, and intellectual property royalties. It further set out a standard under which the transaction may be deemed to have been carried out if the business has in effect changed hands — for example, if the original company winds down the operations it had been running.
The FTC expects the revision to capture new types of transactions that have fallen through gaps in the merger filing system. It plans to tighten merger reviews in particular to keep venture firms with strong growth potential from losing their competitiveness to aggressive acquisition strategies by large companies. FTC Chairman Joo Byung-ki has previously pointed to the need to protect venture firms from such strategies.
"Korean Nvidia-style companies could be acquired by large semiconductor firms, and pharmaceutical ventures could well be bought by established drugmakers," Joo said. "We plan to further strengthen merger reviews so that our venture firms do not fall victim to aggressive and hostile combination strategies by large companies."
