Microsoft $MSFT’s “acqui-hiring” deal with Inflection AI is now drawing antitrust scrutiny across the pond.
The tech giant is facing another antitrust probe for its Inflection AI deal
Microsoft $MSFT’s “acqui-hiring” deal with Inflection AI is now drawing antitrust scrutiny across the pond.
The tech giant paid artificial intelligence firm Inflection a $650 million “licensing fee” to use its AI models and hire most of its employees, including its chief executive Mustafa Suleyman, back in March.
In the U.S., the Federal Trade Commission has reportedly already been investigating whether Microsoft sought to dodge regulatory scrutiny by poaching Inflection staffers and paying the fee rather than buying the company outright. While any merger valued at more than $119 million has to be reported to federal antitrust enforcement agencies, the FTC is examining whether Microsoft’s deal with Inflection AI was structured to avoid antitrust safeguards.
On Tuesday, the Competition and Markets Authority — the primary competition and consumer regulatory agency in the UK — said it was probing the deal, too.
The agency said it had “sufficient information” related to Microsoft’s hiring of Inflection employees and its agreement with the AI company to launch an investigation into whether the deal is anti-competitive. A decision will be made on whether to move forward with further investigation by Sept. 11.
“We are confident that the hiring of talent promotes competition and should not be treated as a merger,” a Microsoft spokesperson said in a statement. “We will provide the UK Competition and Markets Authority with the information it needs to complete its inquiries expeditiously.”
Tech giants have fallen under the microscope for anti-competitive behavior, particularly with the rise of AI fueling competition — and mergers. In the first half of 2024, tech sector deals in the U.S. totaled $186 billion, the largest of any industry, according to consulting firm EY.
Apart from Microsoft’s strange deal with Inflection, Amazon $AMZN has poured $4 billion into AI startup Anthropic to use its tech, and Apple $AAPL purchased Canadian startup DarwinAI earlier this year, adding to its string of quiet AI acquisitions.
As a result, the Department of Justice together with the FTC have reportedly reached a deal to investigate Microsoft, Nvidia $NVDA, and OpenAI over potentially anti-competitive behavior in the AI space, according to The New York Times.
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