Workplace Conflict Resolution Training for Employees
October 16, 2025
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Once again, Silicon Valley is upending itself after the 2024 layoffs. Let’s imagine something for a second. Say you’re part of a small company, one that is genuinely disrupting its industry and keeps developing newer ideas. Usually, a bigger company comes in and offers to buy the start-up, thus acquiring it.
So… what happens when there’s no big buyer, and instead, the team leaves? Enter the reverse acquihire. Want to find out what it is, some examples of it, and what happens to the companies? Keep reading to see some of the top publications’ takes on this new trend.
In a story penned by Kate Clark and Shirin Ghaffary for Bloomberg, they interview Dominic Parella, the CEO of Character.AI, a startup that created a generative AI chatbot service that can use characters or personalities. This company was created in 2021 by Noam Shazeer and Daniel De Freitas, two ex-Google employees.
In turn, Google struck a deal to license Character.AI’s chatbot, which seemed like a good thing until it was revealed that the founders were leaving to join Google. Predictably, the rest of the employees and Dominic Parella were left scrambling as they had no direction.
This is an acqui-hire, a new trend that has been leaving Silicon Valley in flames. Big Tech acquires a company, but rather than developing it, it steals its top talent to license its products or services, not the company itself. Those who are left behind try to make the best of it. The idea is to steal the most talented individuals and to choke the potential competition while it’s still young, bypassing the need for governmental oversight.
“Under the current regulatory regime, I expect more of these to happen.”
According to Fast Company’s Sarah Bregel, six companies have been acquired as of mid-August. In her piece chronicling this new business practice, she explores what happened to the companies once they had been stripped of their main talent and how they moved forward without a captain.
“’The ship, over time, was slowly replaced, board by board, piece by piece, right? But it was still always the same ship,’ [Sean White, Inflection CEO] said.”
The first acqui-hire occurred in March 2024, when Microsoft made a deal that gutted Inflection, a chatbot startup. This deal had the founders and most of the staff leaving, which triggered a Federal Trade Commission investigation as they believed it was designed to violate antitrust laws. Ultimately, Inflection is still alive, but they’ve had to develop a new AI model to be competitive.
Summer 2024 was when acquihires ramped up with Amazon acquiring Adept and Covariant AI, and Google acquired the previously mentioned Character.AI. Amazon’s deal with Adept had them scaling back operations, now focusing entirely on AI agentic operations, rather than developing AI agents to do software tasks, as they had once done. Currently, there are only four people with Adept as their employer on LinkedIn, while Amazon launched a new lab –you guessed it—building AI agents that can handle complex working flows headed by David Luan, Adept’s former CEO. Meanwhile, the license dealt with by Covariant would’ve been “killed by antitrust authorities” according to Covariant’s current CEO, Ted Stinson.
This year, there have been two more instances of acquihires, one by Meta and another by Google.
Josipa Majic Predin has an article on Forbes detailing how these reverse acquihires have been reshaping Silicon Valley by upending the social contract that has been in place so far.
So first, what is the difference between an acquisition and an acquihire? Silicon Valley has had a status quo where employees had stocks and equity participation that they could trade or leverage during a normal acquisition. Instead, they’ve left them high and dry, where they can keep their work at the company, but the company has been depleted so much that their work is adrift, and shares have low to no value.
“The model also reflects the unique nature of AI competition, where breakthrough capabilities often reside in the minds of a small number of researchers and engineers.”
There is another problem with acqui-hires: it creates an innovation paradox. In this scenario, Big Tech gets a big part of the talent instead of developing smaller, diverse companies, the strategy that has ruled over Silicon Valley. Not only that, but the legal implications go beyond the anti-trust, with stakeholders and policy makers trying to weigh in to see if this model will actually bring economic growth.
The main questions are whether this model will continue, as backed by the law, or if they will strike it down, and if it does continue, whether there will be changes or if the law of Silicon Valley for equity will remain.
The AI wars are more brutal than previous innovations, completely upending Silicon Valley’s social contract and possibly breaking the law. In general, having big companies jump hoops to avoid paying or stifling their competitors is never good, but the law has to be the one to stop them. An antitrust case is no joke, as Google can attest with their own current cases regarding advertising and monopolization. Companies might try to break themselves up to avoid any more legal battles, but if reverse acquihires continue being their way to go, they might monopolize in other ways.
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