Dive Brief:
- Microsoft's hiring of Inflection AI CEO Mustafa Suleyman and other key staff did not create a “substantial lessening of competition,” the U.K.'s Competition and Markets Authority announced Wednesday following a monthslong probe.
- After reviewing input from both companies, public submissions and information from competing organizations, the agency concluded Microsoft's hiring of Inflection staff failed to harm competition among consumer chatbot providers and foundational model developers.
- “We are pleased that after an investigation and review of the facts, the CMA has concluded that our hiring of Inflection employees raises no competition concerns," a Microsoft spokesperson told CIO Dive in an email Wednesday.
Dive Insight:
As enterprises rushed to deploy generative AI, top technology providers hurried their development plans, including partnerships with startups, acquisitions and hiring of topflight staff. The moves have raised questions from U.K. regulators.
Microsoft in March announced its plans to appoint Suleyman as the leader of a new division called Microsoft AI. As part of the deal, co-founder and chief scientist Karén Simonyan also joined Microsoft, alongside other senior staffers.
As part of an ongoing review over AI partnerships announced in April, the CMA included the Microsoft-Inflection partnership among those agreements it deemed potentially anticompetitive and issued a public call for comments on the subject.
While Microsoft's appointment of Inflection staff did constitute a relevant merger situation under the jurisdiction of the CMA, the deal "does not give rise to a realistic prospect of a substantial lessening of competition (SLC) as a result of horizontal unilateral effects," the agency said in a six-page report Wednesday.
As part of its AI strategy, Microsoft announced a multiyear, multibillion-dollar investment into OpenAI. As part of the deal, Azure became the startup’s go-to provider for cloud workloads.
Other providers have also sought partnerships with AI startups to accelerate or expand their development of generative AI capabilities.
Amazon completed a $4 billion investment into Anthropic, the maker of chatbot Claude, in March. The deal also placed Claude within AWS' Bedrock, a marketplace for AI models.
Google lured the co-founders of Character.ai, two former Googlers, to rejoin the company in August. Noam Shazeer and Daniel De Freitas and other senior staff joined Google's DeepMind unit.
