TLDR: A coalition of public interest and competition advocacy groups has formally requested the U.S. Federal Trade Commission (FTC) to launch a comprehensive investigation into Meta Platforms’ recent $14.3 billion investment in Scale AI. The groups contend that Meta’s acquisition of a 49% non-voting stake, coupled with the hiring of Scale AI’s CEO and other key staff, constitutes a ‘de facto vertical acquisition’ designed to circumvent antitrust scrutiny and solidify Meta’s market power in the burgeoning artificial intelligence sector.
WASHINGTON D.C. – On Thursday, August 7, 2025, a consortium of prominent advocacy organizations, including Public Citizen, NextGen Competition, Consumer Federation of America, Open Markets Institute, Public Knowledge, and the American Economic Liberties Project, sent a letter to Federal Trade Commission (FTC) Chair Andrew Ferguson, urging an immediate and thorough investigation into Meta Platforms’ substantial $14.3 billion investment in Scale AI. The groups assert that this deal represents a strategic maneuver by Meta to entrench its dominance and stifle competition within the critical artificial intelligence supply chain.
The investment, which was disclosed in June, saw Meta acquire a 49% stake in Scale AI, a company renowned for providing essential data annotation services for training large language models (LLMs) and other generative AI technologies. A key component of the transaction also involved Scale AI’s founder and CEO, Alexandr Wang, joining Meta to spearhead its new Superintelligence Labs, alongside other Scale AI employees.
Critics argue that the structure of this deal, specifically the acquisition of a non-controlling stake just below the 50% threshold for mandatory regulatory reporting, is a deliberate attempt to evade FTC oversight. “This transaction follows Meta’s familiar anticompetitive buy or bury strategy,” the groups stated in their letter, adding that a failure to probe the deal “will establish a dangerous precedent.” They further characterized the investment as a “de facto vertical acquisition” that exploits loopholes in existing merger laws.
The advocacy groups expressed grave concerns that by controlling a significant portion of Scale AI, a “dominant force” in data annotation, Meta could effectively “foreclose existing and potential competitors from Scale AI’s data annotation services.” This control, they warn, could enable Meta to “raise their costs, slow their innovation, and disrupt their operations and gain an undue competitive advantage not through superior innovation but by handicapping its competitors.” Sumit Sharma, executive director of NextGen Competition, emphasized, “The investment in Scale AI includes all the anti‑competitive hallmarks typical of Big Tech’s minority stakes in generative AI firms.”
Furthermore, the groups highlighted that this move neutralizes Scale AI’s role as an independent, neutral resource for the entire industry, transforming it into a “captive asset for Meta’s exclusive benefit.” J.B. Branch, a Big Tech accountability advocate at Public Citizen, commented, “Meta’s $14.3 billion grab is a blatant attempt to control a competitor, lock up scarce AI infrastructure, and poach top talent all while squeezing out rivals. These backdoor deals are deliberately structured to dodge regulatory scrutiny, inching as close to a merger as possible without calling it one.”
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This call for investigation comes as Meta already faces an existing FTC lawsuit concerning its alleged anticompetitive practices in personal social media networking and digital advertising markets. The groups underscored that the FTC’s own merger guidelines support an investigation into such minority stakes, particularly when they grant the investor access to sensitive data or influence over critical business decisions. The outcome of this potential investigation is seen as a crucial test for antitrust enforcement in the rapidly evolving artificial intelligence landscape.
