UK Regulator Checking Microsoft and Inflection AI Hires for ‘Merger Situation’

Inflection AI co-founder Mustafa Suleyman joined Microsoft as CEO of Microsoft AI in March, and took “several” coworkers with him. Now, the UK’s Competition and Markets Authority (CMA) has opened an inquiry into whether this and Microsoft’s other deals with Inflection should be considered anti-competitive.

The CMA has until Sept. 11, 2024 to decide whether to continue the investigation.

Why Microsoft hiring from Inflection drew the CMA’s attention

The inquiry will study “whether it is or may be the case that Microsoft Corporation’s hiring of certain former employees of Inflection and its entry into associated arrangements with Inflection has resulted in the creation of a relevant merger situation,” the CMA wrote on July 16.

If so, the combined company could create a “substantial lessening of competition within any market or markets in the United Kingdom for goods or services,” the CMA wrote, which would fall under the authority’s jurisdiction.

In a statement to the BBC, a Microsoft spokesperson said, “We are confident that the hiring of talent promotes competition and should not be treated as a merger.”

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The CMA continues its investigation into “interconnected web” of AI companies

The investigation highlights the complicated web of relationships between AI players. Suleyman previously worked at Google DeepMind, then co-founded inflection alongside Karén Simonyan. (Simoyan moved to Microsoft AI as chief scientist under Suleyman.)

Inflection AI makes a generative AI chatbot called Pi, which is intended to be a “kind and supportive companion.” It hosts Inflection 2.5, the large language model behind Pi, on Microsoft Azure.

The CMA turned its eye to Inflection AI in April, when Inflection AI was mentioned as a part of a request to comment on “AI partnerships and other arrangements.” Specifically, the CMA highlighted several relationships between giant tech companies and AI startups:

• Microsoft and Mistral AI.
• Amazon and Anthropic.
• Microsoft and Inflection AI.

The CMA has been looking into OpenAI as well. Close relationships between players in the AI industry “could be exacerbating existing positions of market power through the FMs [foundation models] value chain,” the CMA wrote in April. The AI industry contains “an interconnected web of over 90 partnerships and strategic investments involving the same firms,” the CMA said in April.