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Meta’s $14.8 Billion Scale AI Deal Raises Regulatory Questions Amid AI Partnership Scrutiny

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Meta’s $14.8 billion investment in data-labeling startup Scale AI, along with hiring its CEO, poses a test of the Trump administration’s stance on so-called “acquihire” deals—arrangements that some critics argue are used to bypass antitrust scrutiny.

The deal, announced Thursday, gives Meta a 49% nonvoting stake in Scale AI, which employs gig workers to manually label data and serves major clients including Meta’s rivals Microsoft and OpenAI. Because Meta does not gain a controlling stake, the transaction avoids mandatory U.S. antitrust review. Still, regulators could investigate if they suspect the deal was structured to sidestep rules or harm competition.

The structure aims to prevent Meta from cutting off competitors’ access to Scale’s services or gaining undue insight into rival operations. Despite this, Reuters reported that Alphabet’s Google has decided to sever ties with Scale following Meta’s investment, while other customers are reconsidering their relationships.

Scale AI stated its business remains strong and that it is committed to protecting customer data. Scale’s 28-year-old CEO Alexandr Wang will join Meta as part of the deal but will remain on Scale’s board with restricted access to sensitive information.

Experts say that while the Trump administration’s antitrust enforcers are cautious of big tech platforms, they generally want to avoid overregulating AI development. William Kovacic, competition law expert at George Washington University, noted regulators will watch these partnerships closely but might not intervene if they do not stifle competition.

Previous FTC inquiries into “acquihire” deals under the Biden administration—including Amazon’s hiring from AI startup Adept and Microsoft’s $650 million deal with Inflection AI—have so far resulted in no enforcement action.

Boston College Law professor David Olson highlighted Meta’s choice of a minority, nonvoting stake as a legal shield, though he acknowledged the FTC could still seek to review the deal.

The investment has drawn criticism from U.S. Senator Elizabeth Warren, who called for scrutiny to ensure Meta does not unlawfully suppress competition or increase monopoly power. Meta is already facing an FTC monopoly lawsuit, but whether regulators will challenge this specific investment remains unclear.

Separately, the U.S. Department of Justice’s antitrust division is probing whether Google’s partnership with chatbot maker Character.AI was structured to evade regulatory review and is seeking advance notice of Google’s AI investments as part of broader efforts to rein in the company’s dominance.

Apple Loses Appeal to Delay App Store Antitrust Reforms in Epic Games Case

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Apple has failed in its latest attempt to delay a U.S. court order requiring changes to its App Store practices, marking a significant setback in its long-running legal battle with Epic Games. The 9th U.S. Circuit Court of Appeals on Wednesday rejected Apple’s request to pause enforcement of parts of the federal judge’s injunction while it pursues further appeals.

The case stems from Epic Games’ 2020 lawsuit challenging Apple’s control over its iOS App Store and in-app payment system. Epic argued that Apple’s policies stifle competition and allow it to collect excessive fees from app developers.

Court Orders Apple to Open App Store to More Competition

In April, U.S. District Judge Yvonne Gonzalez Rogers found Apple in contempt of her previous injunction and ordered the company to immediately cease several business practices that restricted developers’ ability to direct users to alternative payment options. Among the practices targeted was Apple’s introduction of a 27% fee on developers who facilitate payments outside of the App Store—a fee the judge said was an attempt to sidestep the original injunction.

Additionally, the court barred Apple from restricting where app developers can place links or buttons that lead users to external purchasing platforms.

Epic Games CEO Tim Sweeney celebrated the appeals court decision on social media, stating that the “long national nightmare of the Apple tax is ended.”

Apple Argues for Business Control, Epic Sees New Competition

In its emergency appeal, Apple argued that the ruling strips it of control over “core aspects of its business operations” and unfairly compels the company to give developers free access to its platform services. Apple also expressed disappointment at the appeals court decision but vowed to continue its legal battle.

Epic Games countered that Apple’s actions were aimed at preserving its dominance and maintaining revenue streams that the court had ruled were anti-competitive. Epic claimed that since the injunction was issued, many developers have already introduced better payment systems, improved deals, and expanded choices for consumers, increasing genuine competition on iOS.

Ongoing Legal Risks for Apple

This latest ruling leaves Apple exposed to continued legal and regulatory scrutiny. Judge Gonzalez Rogers previously accused Apple of misleading the court about its compliance efforts and referred both Apple and one of its executives to federal prosecutors for potential criminal contempt charges.

While Apple won most aspects of the original lawsuit in 2021, Gonzalez Rogers did rule that the company must allow developers to inform users about alternative payment options outside of Apple’s in-app purchase system.

The outcome of Apple’s ongoing appeal will likely have significant implications for the future of digital marketplaces and the company’s multibillion-dollar App Store revenue.

Apple Seeks to Pause Judge’s Order in Epic Games Case, Cites Irreparable Harm

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Apple has requested that the 9th U.S. Circuit Court of Appeals temporarily halt a federal court ruling that mandates major changes to how it operates its App Store, arguing the company will suffer “irreparable harm” if key provisions are enforced during its legal challenge.

Key Points:

  • Contempt Ruling: The motion follows U.S. District Judge Yvonne Gonzalez Rogers’ April 30 ruling, which found Apple in contempt of a 2021 antitrust injunction originally stemming from Epic Games’ lawsuit. She ordered Apple to end new App Store rules that allegedly circumvented the original order.

  • Apple’s Argument: Apple claims the ruling interferes with core business operations and that the company is being forced to give away access to its ecosystem without proper compensation. It specifically objected to:

    • A ban on Apple’s 27% commission for out-of-app purchases.

    • Restrictions on where developers may place external payment links.

  • Epic’s Response: Epic Games labeled Apple’s motion a “last ditch effort” to avoid competition and maintain what it called “junk fees.” The company said developers have already begun offering better deals and alternative payment methods since the injunction.

Context:

  • The Lawsuit: The legal battle began in 2020 when Epic challenged Apple’s dominance over iOS app distribution and in-app payment systems, claiming anti-competitive practices.

  • 2021 Injunction: A prior order from Judge Gonzalez Rogers required Apple to allow app developers to direct users to alternative payment platforms. Epic argued Apple had not complied in good faith.

  • Criminal Referral: In her recent ruling, the judge accused Apple of misleading the court and referred the company and an executive to federal prosecutors for a possible criminal contempt investigation.

What’s Next:

The appeals court must now decide whether to pause enforcement of the contempt ruling as Apple’s legal challenge proceeds. If denied, Apple would have to immediately comply with the injunction, potentially reshaping the App Store’s fee model and developer guidelines.