[andrewparker]

This post doesn't quite comprehend why Meta made a 49% investment instead of an acquisition.

The path Meta chose avoided global regulatory review. FTC, DOJ, etc and their international counterparts could have chosen to review and block an outright acquisition. They have no authority to review a minority investment.

Scale shareholders received a comparable financial outcome to an acquisition, and also avoided the regulatory uncertainty that comes with govt review.

It was win/win, and there's a chance for the residual Scale company to continue to build a successful business, further rewarding shareholders (of which Meta is now the largest), which is just like wildcard upside and was never the point of the original deal.

[sigmoid10]

>They have no authority to review a minority investment.

That's just wrong. Partial acquisitions and minority shareholdings don't allow you to bypass antitrust investigations.

See 15 U.S.C. §18 for example. It is similar in the EU.

[andrewparker]

You are literally correct, but not engaging in the point. Meta shares in Scale are explicitly non-voting shares. Influence/control post minority investment matters as to whether the deal can be reviewed via Clayton Act. Meta did everything they could to avoid regulatory review with this transaction, and it worked.

[sigmoid10]

The point remains wrong even if you pivot to this argument. Every major competitor has cancelled their deals with Scale AI and there are even rumours that the company will wind down and perhaps eventually stop working while key workers are essentially being absorbed into Meta. This is textbook anti-competitive behaviour and more than enough reason to warrant antitrust investigations by oversight agencies in the major markets.

[linotype]

The current US administration allows you to bypass US antitrust regulations.

[sigmoid10]

But not because of majority/minority reasons as the other comment implies. It would be utterly ridiculous if you could just buy 49% of each of your competitors without any possibility for the government to interfere.

[linotype]

Utterly ridiculous is where we’re at right now.

[sigmoid10]

In the US perhaps, but elsewhere antitrust laws still have some meaning.

[theahura]

I agree that this is a possible reason. Meta wants to move fast and m&a is too slow for their tastes. I make the case in the article though that the actual acquisition doesn't really make sense for metas core business, but I agree it's possible.

I disagree that this is a win/win. Scale stock is still illiquid, and people who remain at scale or have scale stock are now stuck with shares that are actually less valuable -- even though the market price has ostensibly gone up, the people who made the stock valuable are gone

[tibbar]

Shareholders retain their stock, but also received a dividend equivalent to selling all their shares at a premium to the previous valuation. It is actually an incredible deal for them. (Source: I'm one of them.)

[theahura]

O shit really? That's a massive update and possibly invalidates a lot of this article. It's also the first I've heard of this -- can you tell me more? Are you saying everyone essentially got bought out? (if you want to dm me in case its still pseudo-private, feel free to at theahura at gmail)

ETA: there's now an update header on the article based on this information

[aprilthird2021]

Reportedly the only reason they did this at all is that Wang asked to get a return for investors and employees. It was not Meta who wanted to own any part of Scale (makes sense too, they are already users of Scale data and don't really need anything they get from owning Scale as a company / business).

[cavisne]

Right, Microsoft did this, Google did this for character AI.

I don’t really understand the purpose of all this, Scale is not an ai research lab, it’s basically Fiverr.

Why would bringing people over from there make Meta more compelling to AI researchers?