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UK Regulators Probe Microsoft’s Hiring of Inflection AI Staff

By  |  July 16, 2024

U.K. regulators have initiated a formal investigation into Microsoft’s recent hiring spree from Inflection AI, a move that saw the majority of Inflection’s staff join Microsoft’s new AI division. The Competition and Markets Authority (CMA) announced the phase one merger investigation, with a deadline of September 11th to decide if the probe will advance to a more in-depth phase two.

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    If the investigation progresses, it could pose significant challenges to Microsoft’s ambitions in the AI sector. This scrutiny comes on the heels of the CMA’s detailed review of Microsoft’s $68.7 billion acquisition of Activision Blizzard in 2022, which led to a forced restructuring of the deal and the surrender of key cloud gaming rights in the U.K. and other markets. Though the Inflection AI investigation is in its early stages, the implications could extend far beyond the U.K.

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    “We are confident that the hiring of talent promotes competition and should not be treated as a merger,” said Microsoft spokesperson Robin Koch in a statement to The Verge. “We will provide the U.K. Competition and Markets Authority with the information it needs to complete its enquiries expeditiously.” Among those hired from Inflection AI is Mustafa Suleyman, cofounder of Google DeepMind and now CEO of Microsoft AI. Suleyman departed from Google in 2022 to establish Inflection AI.

    Read more: Republican Lawmakers Demand Intelligence Briefing on Microsoft’s AI Investments

    This investigation reflects a growing trend of regulatory scrutiny over AI partnerships and investments by major tech companies in both the U.K. and the EU. The CMA had previously shown interest in Microsoft’s partnership with Mistral AI but concluded it did not meet the criteria for a merger investigation.

    In addition to the CMA’s actions, Microsoft faces antitrust challenges in the EU. The European Commission has charged Microsoft with antitrust violations for bundling its Teams app with Office 365 and Microsoft 365 subscriptions. Should Microsoft be found guilty, it could face fines of up to 10 percent of its annual worldwide turnover. Recently, Microsoft also reached a settlement with a cloud industry group in Europe to stave off another potential antitrust battle.

    Source: The Verge