UK regulator probes Microsoft’s AI hires for potential merger concerns
LONDON, UNITED KINGDOM — The UK’s Competition and Markets Authority (CMA) has launched a formal investigation into Microsoft’s recent hiring of key personnel from artificial intelligence startup Inflection AI.
The probe aims to determine whether Microsoft’s actions constitute a relevant merger situation under UK law.
Microsoft’s strategic AI talent acquisition
In March 2024, Microsoft made waves in the AI industry by hiring Mustafa Suleyman, co-founder of Inflection AI, as CEO of its new Microsoft AI division.
The tech giant also brought on board Karén Simonyan, Inflection’s Chief Scientist, along with approximately 70 other employees from the startup.
Simultaneously, Microsoft agreed to pay Inflection AI around $650 million to license its software.
Regulatory concerns and investigation timeline
The CMA’s investigation, set to conclude its initial phase by September 11, 2024, is focused on determining whether Microsoft’s actions have created a relevant merger situation under the merger provisions of the Enterprise Act 2002. The primary concern is the potential impact on competition in the UK market.
A Microsoft spokesperson told Investopedia that they are “confident that the hiring of talent promotes competition and should not be treated as a merger.”
They said Microsoft “will provide the UK Competition and Markets Authority with the information it needs to complete its inquiries expeditiously.”
Broader context of antitrust scrutiny
This investigation adds to the list of antitrust challenges Microsoft has faced.
The CMA previously scrutinized Microsoft’s $69 billion acquisition of Activision Blizzard, which was a significant hurdle before finalizing the deal. Furthermore, Microsoft’s strategic relationship with OpenAI, marked by over $10 billion in investments, has also attracted regulatory attention.
The U.S. Federal Trade Commission (FTC) has also opened a similar investigation into Microsoft’s dealings with Inflection AI.
The outcome of this investigation could have implications for how tech giants approach talent acquisition and partnerships in the rapidly evolving AI sector.
