The anti-trust spotlight is blazing across the AI industry, putting Microsoft in the hot seat.
The UK's Competition and Markets Authority (CMA) is investigating whether Microsoft's aggressive hiring of Inflection AI employees and related agreements constitute a covert merger that could stifle competition. Microsoft reportedly paid US$650 million to Inflection for access to its AI models and to reimburse the startup's investors.
Close but no merger
Following consultations in April, the CMA announced on July 16 that it had enough information to initiate a formal investigation into Microsoft's dealings with Inflection. The CMA will decide by September 11 whether to advance to a more detailed second-phase investigation.
Microsoft stated it believes talent recruitment promotes competition and that the Inflection matter should not be viewed as a merger. The company is committed to providing the CMA with relevant information to expedite the investigation.
In 2023, Microsoft participated in Inflection's US$1.3 billion funding round. In March 2024, Microsoft invested US$650 million to hire Inflection CEO Mustafa Suleyman and several team members and to integrate Inflection's technology, including selling its AI models on the Azure cloud platform.
Suleyman, the co-founder of DeepMind (acquired by Google in 2014), has been appointed Executive Vice President at Microsoft and head of the newly formed Microsoft AI division, overseeing AI-related products like the Copilot AI assistant.
Windows to AI firms
Microsoft's actions have raised concerns among regulators and legal experts, who argue that this appears to be an acquisition of Inflection without adhering to acquisition regulations. Following the departure of many employees to Microsoft, Inflection has shifted its focus from consumer AI to enterprise AI software sales.
In addition to Inflection, Microsoft's collaborations with other prominent AI startups, including OpenAI and France's Mistral AI, are under scrutiny. Recently, Microsoft relinquished its observer seat on OpenAI's board.
Although the observer seat lacked voting rights, this move is seen as an effort to alleviate concerns from US and UK regulators about Microsoft's potential overreach in controlling OpenAI.
Article translated by Jerry Chen
