Microsoft’s decision to invest $650 million in the AI startup Inflection AI has raised some eyebrows. The move is now under scrutiny as UK regulators have formally investigated the partnership.
The Inflection AI deal is in the spotlight.
The UK Competition and Markets Authority (CMA) has given itself until September 11, 2024, to complete its initial investigation into Microsoft’s $650 million investment in Inflection AI. The primary issue is whether this deal might significantly reduce competition in any UK market for goods or services.
In a shift from its usual approach, Microsoft hired Mustafa Suleyman and other key staff from Inflection AI instead of buying the company outright. This move has caused unease among Inflection AI’s remaining employees and potential recruits, affecting the startup’s ability to attract new talent.
If the investigation moves to a second phase, Microsoft could encounter major regulatory obstacles to its AI goals, potentially losing important talent. The CMA is examining whether the deal was structured to sidestep competition concerns.
This approach by Microsoft, seen as a talent grab, is under review by the CMA, which may decide to escalate the investigation. Additionally, the American Federal Trade Commission (FTC) is also looking into the agreement.
