Microsoft, led by CEO Satya Nadella, has successfully dodged a comprehensive investigation by the UK’s Competition and Markets Authority (CMA) regarding its recruitment of employees from the startup Inflection AI.
The CMA declared on Wednesday that, while Microsoft’s acquisition of specific assets from Inflection does qualify as a “relevant merger situation” in the UK, it doesn’t foresee a “substantial lessening of competition” as a result of this action. This comes after the CMA initially initiated a merger investigation in July, scrutinizing the potential for reduced competition within the AI sector due to Microsoft’s recruitment of Inflection personnel. However, following a thorough assessment, the CMA concluded that such a risk was absent, affirming that the agreement constituted a legitimate merger.
Although Microsoft hasn’t disclosed details about any licensing arrangement with Inflection, it’s known that the tech giant has absorbed several members of Inflection’s 70-person team. Meanwhile, the CMA is also conducting separate inquiries into Microsoft’s substantial investment in OpenAI, the creator of ChatGPT, and the partnership between Amazon and AI firm Anthropic, examining if these partnerships qualify as mergers with the potential to harm competition.
Microsoft’s recruitment of Mustafa Suleyman, co-founder of Google DeepMind and Inflection, along with other key Inflection employees in March 2024, was seen as a strategic move to diversify its AI risk. Suleyman was subsequently appointed as Microsoft’s executive vice president and CEO of Microsoft AI, a newly established division focusing on AI products.
This CMA decision comes as Microsoft faces an FTC investigation. Despite the CMA’s clearance, the company continues to navigate regulatory scrutiny in its pursuit of AI dominance. Notably, Microsoft reported a 21% year-over-year increase in cloud revenue for its fourth quarter, underscoring its commitment to leading the AI era.
