The UK’s Competition and Markets Authority (CMA) has launched a formal investigation into Microsoft’s recruitment of former employees from Inflection AI and its partnership with the startup, the regulator announced on Tuesday.
In the past 18 months, global regulators have increasingly scrutinized potentially anti-competitive behavior in the AI sector, with Microsoft’s various deals with smaller startups drawing significant attention. This intensified focus includes a particular interest in Microsoft’s recent activities.
In March, Microsoft made headlines by hiring Mustafa Suleyman, co-founder of Google DeepMind, to lead its newly established AI unit. Alongside Suleyman, the tech giant also brought on several employees from Inflection AI, a company Suleyman founded in 2022. As part of the agreement, Microsoft committed to paying approximately $650 million to Inflection AI. This deal granted Microsoft access to Inflection’s advanced AI models and enabled the startup to reimburse its investors, which notably include former Google CEO Eric Schmidt and Microsoft co-founder Bill Gates.
Addressing the CMA’s investigation, a Microsoft spokesperson responded in an emailed statement to Reuters: “We are confident that the hiring of talent promotes competition and should not be treated as a merger. We will provide the UK Competition and Markets Authority with the information it needs to complete its enquiries expeditiously.”
The CMA is expected to make a decision by September 11 on whether to escalate the investigation for a more thorough review. This investigation adds to Microsoft’s existing regulatory challenges, particularly concerning its relationships with leading AI startups such as OpenAI and France’s Mistral AI.
In an effort to address antitrust concerns from U.S. and British regulators, Microsoft recently relinquished its board observer seat at OpenAI. This move was intended to alleviate fears regarding Microsoft’s potential overreach and control over the AI startup.
The CMA’s scrutiny extends beyond Microsoft, as it has also sought opinions on partnerships between other tech giants and AI startups, such as Amazon’s collaboration with Anthropic. This broader regulatory landscape indicates a heightened vigilance among authorities to ensure fair competition and prevent monopolistic practices in the rapidly evolving AI industry.
