Google DeepMind hires staff from Contextual AI in licensing deal, source says

May 19 (Reuters) - Alphabet's AI ‌research subsidiary, Google ​DeepMind, ​has agreed to recruit more than 20 researchers from AI startup Contextual AI and license its technology, a person familiar ‌with the matter told Reuters on Tuesday.

Alphabet paid between $80 million ⁠and $90 million to Contextual as part of the agreement, and Contextual's co-founder and CEO ‌Douwe Kiela is among those ‌joining DeepMind, according to the source.

Google declined to comment and Contextual did not immediately respond to a request for comment.

The agreement, first reported by ​Bloomberg News, is the latest move by the Google parent to strike a licensing deal to acquire talent. Last year, it paid $2.4 billion ⁠in license fees as part of a deal to use some of AI code generation startup ​Windsurf's technology under non-exclusive terms and to hire several key staff.

In 2024, Google signed a licensing deal with Character.AI ​that granted it a non-exclusive license to ‌the chatbot maker's large language model technology.

Acquihires, in which major tech companies pay large sums to secure the ⁠talent and technology of promising startups without formally acquiring them, are increasingly viewed by antitrust regulators as an attempt to evade merger rules.

Unlike acquisitions that would give ⁠the buyer a controlling stake, these deals do not require a review by U.S. ​antitrust regulators.

In December, Nvidia agreed to license chip technology from Groq and to hire its CEO, without buying the startup.

Companies' efforts to sidestep U.S. antitrust scrutiny through tactics ‌such as acquihires are a "red flag," Acting Assistant Attorney General Omeed Assefi told Reuters in March.

Contextual AI raised $80 ‌million in a Series A funding round in 2024, led by venture ⁠capital firm Greycroft and existing investors, ‌including Bain Capital Ventures ​and Lightspeed.

(Reporting by Juby Babu in Mexico City and Kenrick Cai in San Francisco; Editing by Shilpi Majumdar and ‌Edmund Klamann)

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