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Satya Nadella-led Microsoft Corp. (NASDAQ:MSFT) has managed to avoid a comprehensive U.K. probe into its recruitment of staff from startup Inflection AI.
What Happened: On Wednesday, the Competition and Markets Authority or CMA said that while Microsoft’s acquisition of “certain assets” from Inflection does represent a “relevant merger situation” in the U.K., it does not anticipate a “substantial lessening of competition” due to this action, reported CNBC.
The CMA initially referred Microsoft’s recruitment of Inflection talent for a merger investigation in July, evaluating the potential for a “substantial lessening of competition” within the AI sector.
However, after assessment, the CMA found no risk of such an outcome, while asserting that the agreement constituted an effective merger, the report noted.
While Microsoft has not publicly revealed any details of a licensing arrangement with Inflection, it is known that the tech giant incorporated several members of Inflection’s 70-person team.
Meanwhile, the CMA is also conducting a separate investigation into Microsoft’s multibillion-dollar investment in ChatGPT-maker OpenAI. In April 2024, the EU said that Microsoft’s about $13 billion investment in OpenAI will not face a formal investigation by their merger regulators.
CMA is also examining whether the partnership between Amazon.com Inc. and AI firm Anthropic qualifies as a merger that could potentially harm competition, the report noted.
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Why It Matters: Microsoft announced the recruitment of Mustafa Suleyman, co-founder of Google DeepMind and Inflection, along with several other key Inflection employees in March 2024.
Suleyman was named as the company’s executive vice president and CEO of Microsoft AI, a new division concentrating on AI products. This development was seen as Microsoft’s strategic move to diversify its AI risk.
While the CMA has cleared the tech giant in this regard, Microsoft is also under FTC investigation.
In July, Microsoft reported its fourth-quarter earnings highlighting a 21% YoY increase in cloud revenue, with the company highlighting its commitment to leading the AI era.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Posted In: MSFT
