The UK Competition and Markets Authority (CMA) has officially launched an investigation into Microsoft's hiring practices involving personnel from Inflection AI, signaling increased regulatory scrutiny of technology investments globally. The CMA declared on Tuesday that it had acquired sufficient information regarding Microsoft's recruitment of former Inflection AI employees and the associated arrangements to justify initiating an inquiry.
The formal investigation follows the CMA's April request for public input on the Microsoft-Inflection association, amid broader concerns regarding mergers and acquisitions within the rapidly evolving AI sector. The CMA has set a deadline of September 11 to decide whether to escalate the probe further.
In March, Microsoft invested $650 million to employ Mustafa Suleyman, Inflection AI’s CEO and co-founder of Google’s DeepMind, along with several other team members. Additionally, the tech giant licensed Inflection's technology. This move was part of a $1.3 billion funding round in which Microsoft participated last year. Inflection AI, originally established in 2022 as a consumer AI company, shifted its focus to enterprise AI software for businesses after most of its staff transitioned to Microsoft.
This hiring spree has attracted the attention of regulators and legal experts who suggest it mirrors an acquisition, although it does not adhere to conventional acquisition protocols. Both Microsoft and Inflection AI have asserted that their agreement does not constitute a merger, emphasizing Inflection AI’s continued independence.
The CMA's scrutiny is part of a larger trend of regulatory bodies in the US, EU, and UK examining significant AI investments by major technology companies. Recent developments include Microsoft's decision to relinquish its observer seat on OpenAI's board and the European Commission’s consideration of an antitrust investigation into the Microsoft-OpenAI relationship. Similarly, the US Federal Trade Commission has begun investigating investments by tech giants like Microsoft, Amazon, and Google in generative AI startups.
