Microsoft is under investigation in the UK over allegations that it effectively merged with an artificial intelligence (AI) start-up firm by hiring its key employees. Inflection AI, a company specializing in generative AI, saw several of its top staff members leave to join Microsoft, including co-founder Mustafa Suleyman who now heads the tech giant’s new AI division.
The Competition and Markets Authority (CMA) has launched a probe to determine whether Microsoft’s hiring of Inflection AI staff constitutes a merger that could potentially lessen competition in the market. Microsoft has defended its actions, stating that the hiring of talent promotes competition and should not be treated as a merger.
In addition to hiring key employees, Microsoft also entered into a non-exclusive licensing deal with Inflection AI to use the company’s AI models. The CMA’s initial inquiry, known as a phase one inquiry, was prompted by concerns raised in April regarding Microsoft’s acquisition of Inflection AI talent.
If the CMA finds sufficient evidence of a merger between Microsoft and Inflection AI that could harm competition, it will proceed with a more in-depth investigation. A decision on whether the transaction should be cleared or investigated further is expected by September 11.
The investigation comes amid a growing trend of tech giants investing in AI technologies and partnerships. Companies like Microsoft, Google, Meta, and others have been incorporating generative AI products into their services to capitalize on the growing interest in AI technology.
The CMA has expressed concerns over the dominance of big tech companies in the AI sector and the potential risks of larger firms controlling access to AI hardware and products. The watchdog’s chief executive, Sarah Cardell, emphasized the importance of fair competition and consumer protection in ensuring that the benefits of AI innovation are shared widely across society.
As the investigation unfolds, the outcome could have significant implications for the future of AI technology and competition in the tech industry.
