Microsoft ducks antitrust investigation

into “arrangements” involving Inflection AI

 

 

 

Even though the agreement was a merger, the CMA concluded that Microsoft had not engaged in anti-competitive behavior and absolved the company of any misconduct.

Following an inquiry into its engagement with company Inflection AI, the UK’s competition authorities exonerated Microsoft of engaging in anti-competitive activities.

Senior leaders of the startup and a sizable chunk of its remaining employees joined Microsoft’s new AI division as part of the purchase, which was reportedly valued at over $650 million. Additionally, the hyperscaler gained access to Inflection AI’s models.

Joel Bamford, executive director of mergers at the CMA, confirmed the decision in a statement. He stated that the preliminary examination determined that the employee transfers and other “tactical arrangements” meant the two companies were no longer separate.

As a result, the agreement qualified as a merger for the purposes of UK law, making the CMA tasked with reviewing it.

We also considered the possibility that the merger would result in a notable decline in competitiveness. In this instance, the data did not indicate any competitive issues that would have necessitated a more thorough Phase 2 evaluation. The consumer chatbots that Microsoft has created both directly (Copilot) and in collaboration with OpenAI (ChatGPT) are not well-competited with Inflection AI. We approved the purchase based on this,” Bamford stated.

The investigation was made public in July as worries about possible anti-competitive actions by significant players in the AI field grew.

In March, the hyperscaler hired both co-founders of Inflection AI, Mustafa Suleyman and Karen Simonyan, to head up their newly created Microsoft AI team as CEO and chief scientist respectively.

Suleyman was also the founder of DeepMind, an AI company now owned by Google.

The move to hire Suleyman and Simonyan was followed by a number of other Inflection employees making the switch to Microsoft, attracting the attention of competition regulators.

The deal also allowed the firm to hire most of the startup’s 70-strong workforce, as well as gain access to the AI company’s models.

In a statement reacting to the probe’s announcement in July, Microsoft said it was “confident that the hiring of talent promotes competition and should not be treated as a merger”.

At the time, Microsoft was already under scrutiny over its partnership with other prominent AI startups, including OpenAI and French firm Mistral AI.

Although the CMA did find the deal did constitute a merger, it did not find the terms constituted anti-competitive behavior and thus cleared Microsoft of any wrongdoing.