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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.

Senator Mullin Urges Release of Ethics Report on Matt Gaetz Amid Attorney General Nomination

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Background of Controversy

Republican Senator Markwayne Mullin has called on the House of Representatives to release an unreleased ethics report involving allegations of sexual misconduct against Matt Gaetz, President-elect Donald Trump’s nominee for attorney general. The report also examines allegations of illegal drug use.

Gaetz, 42, resigned from the Republican-controlled House last Wednesday, hours after his nomination was announced and just two days before the House Ethics Committee was expected to release its findings. While Gaetz has denied any wrongdoing, the investigation reportedly revisits earlier claims of sexual misconduct involving a 17-year-old girl, allegations that had already been reviewed by the Justice Department without resulting in criminal charges.

Mullin’s Stance on Transparency

Mullin, speaking on NBC’s Meet the Press, emphasized the Senate’s need to access the report before deciding on Gaetz’s confirmation.

  • “The Senate should have access to that,” said Mullin, while remaining undecided on whether the report should be made public.
  • Mullin, a previous critic of Gaetz, highlighted the importance of the nominee’s background, stating, “The background of Matt Gaetz does matter.”

Despite these concerns, Mullin maintained he would give Gaetz a fair evaluation during the confirmation process.

House Speaker and Ethics Report

House Speaker Mike Johnson has opposed the release of the ethics report, arguing that it would set a problematic precedent. On Sunday, he reiterated this stance during a CNN interview, asserting, “We don’t want to go down that road.”

  • Johnson lacks direct authority to prevent the Ethics Committee from releasing its findings but has strongly influenced the narrative within the House.
  • Meanwhile, the lawyer representing the teenager involved in the allegations has called for the report to be made public.

Senate Confirmation Challenges

Trump’s nomination of Gaetz has sparked mixed reactions in the Senate, which holds the constitutional responsibility to confirm high-level appointments.

  • With Republicans holding a majority of at least 52 seats in the 100-seat Senate, Gaetz’s confirmation depends on securing party support.
  • Several Republican senators have expressed skepticism about Gaetz’s qualifications and suitability for the role.
  • Democratic Senator Chris Coons voiced strong opposition, stating that the Senate must exercise its “advice and consent” role to ensure nominees meet high standards of character and capability.

Potential Use of Recess Appointments

Mullin signaled openness to a controversial alternative should the Senate fail to confirm Gaetz. This approach, known as a recess appointment, allows a president to bypass Senate confirmation by appointing officials during congressional recesses.

  • Trump has advocated for this option, calling on Republican lawmakers to enable him to bypass potential confirmation roadblocks.
  • Mullin described the option as an “absolute last resort,” while Democrats warned that such a move would undermine the Senate’s constitutional role.

Implications for the Justice Department

If confirmed, Gaetz would oversee the Department of Justice, a position requiring substantial legal and ethical oversight capabilities. Critics, including Senate Democrats, argue that the allegations and controversies surrounding Gaetz raise serious questions about his fitness for such a critical role.

The controversy highlights tensions within the Republican Party and between the Senate and the incoming Trump administration, as lawmakers grapple with balancing political loyalty, transparency, and ethical governance.