• by Wendy Davis , Yesterday

Advocacy groups are urging the Federal Trade Commission to investigate Meta Platforms' $14.3 billion acquisition of a 49% stake in artificial intelligence company Scale AI.

The deal will enable Meta "to foreclose existing and potential competitors from Scale AI’s data annotation services," Public Citizen, NextGen Competition, Consumer Federation of America, Open Markets Institute, Public Knowledge and other organizations said Thursday in a letter sent to FTC chair Andrew Ferguson. 

"High-quality data annotation -- the process of labeling, categorizing, and tagging data to train Large Language Models (LLMs) -- is a critical, non-commoditized input for developing state-of-the-art generative AI models," the organizations write. 

The letter comes around six weeks after Meta said it had purchased nearly half the company, founded in 2016 by Alexandr Wang and Lucy Guo. Wang joined Meta as part of the deal, and is heading up the company's new Superintelligence Labs.

Public Citizen and the others say Meta's financial investment, combined with its hiring of Wang and other Scale AI employees, will position Meta to wield considerable control over Scale AI -- which the watchdogs call a "dominant force" in data annotation.

"By controlling a critical input that its rivals depend on, Meta can 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," the groups write.

"Instead of competing by developing its own data annotation capabilities, Meta has moved to absorb the market leader," they write. "This action neutralizes Scale AI’s role as an independent, neutral resource for the entire industry and transforms it into a captive asset for Meta’s exclusive benefit."