Private equity industry teams up with AI companies to fast forward deployment of AI at portfolio companies, putting millions of jobs at risk

Multiple private equity firms recently announced deals with Open AI, Anthropic, and Google to supercharge the deployment of these companies’ AI tools at private equity firms’ portfolio companies. These deals incentivize private equity-backed firms to adopt specific tools that the private equity firms have invested in, potentially accelerating job cuts at private equity-owned companies.

On May 4th, Blackstone announced a $1.5 billion deal with AI firm Anthropic and private equity firms Hellman & Friedman and Goldman Sachs. The deal is also backed by General Atlantic, Leonard Green, Apollo Global Management, GIC, and Sequoia Capital. The new venture is intended to accelerate the integration of Anthropic’s AI tools into the portfolio companies of the firms involved in the deal. 

Within minutes of the Anthropic announcement, the company’s competitor OpenAI announced a similar deal, worth $4 billion with private equity firms including TPG, Brookfield Asset Management, Advent and Bain Capital. 

The private equity firms involved in “OpenAI’s new joint venture have access to more than 2,000 portfolio companies and clients,” according to a Bloomberg article. Private-equity firms can push technology decisions across their entire portfolios of investments, which includes thousands of companies.

The day after these two announcements, Bloomberg covered a potential third deal in an article titled: Blackstone, KKR in Talks With Google to Bring AI Models to Portfolio Firms, highlighting how all three deals “will turn private equity-backed firms into a new revenue source for AI companies.” The article reports similar conversations between Google and private equity firm EQT. These deals give Google access to the private equity firms’ portfolio companies that it previously didn’t have access to. 

Previous reporting has covered similar agreements between Google and private equity firms, such as Vista Equity Partners, Thoma Bravo, and CVC Capital Partners.

A dozen private equity firms, thousands of companies, millions of workers

Private equity firms seek to invest in these AI software firms while pushing for implementation of AI at thousands of portfolio companies. PESP lists 71 of these companies in our database of the largest private equity backed firms in the US with over 7,000 employees. These 71 companies collectively employ almost 2 million people, with big names such as Michaels, PetSmart, Tropical Smoothie Cafe, and Jersey Mike’s Subs, but also lesser known large employers in key industries, such as tech services, healthcare, manufacturing, education, and transportation. None of the announcements comment on the potential effects on the workforce of these companies or customer experience from a shift towards AI. 

These deals reignite concerns over the supercharged implementation of AI for workers and customers, as many experts have highlighted the potential for displacement of large numbers of employees. These concerns are multiplied by their application to the private equity playbook, where private equity firms are already under pressure from investors and interest payments to drastically increase profitability in a short period of time. Even before AI integration, this often led to cost cutting that negatively impacted employees, including layoffs, closures, and lost wages. A 2019 study by researchers at Harvard and the University of Chicago study found that private equity takeovers result in significant job losses. 

Deals multiply bets on AI sector when adding Data centers and utilities 

Data center growth in the US and globally continues to grow at unprecedented speeds as the growth of AI technology and the accompanying data centers required to keep them functional, threatens to take up large portions of energy production. This may explain the connecting trends of private equity investments in AI companies, data centers, and utility companies. 

Blackstone’s website states that the company has “built the largest and fastest growing data center business in the world,” as other private equity firms seek to acquire or invest in the data center build out as well. Private equity firms have invested nearly $200 billion in data center–related deals since 2022, driving a wave of acquisitions across gas-fired power plants, fossil fuel assets, and even acquiring stakes in electric utilities and other critical infrastructure to fuel the AI boom.

The combined investments across the AI industry could place a number of private equity firms in a position to profit along the supply chain of the AI boom from a demand that they create. However, this may be a doubling or quadrupling down on an investment in a nascent, risky  industry and could also negatively impact hundreds of millions of employees and customers. 

As private equity firms team up with AI software companies to supercharge the deployment of AI across their portfolio companies, new questions arise about how employees might be affected and what policies are in place to support them if these tools lead to workers’ worst fears around mass layoffs or privacy concerns.