Dive Brief:
- The U.K.'s Competition and Markets Authority will review Microsoft's hiring of Inflection AI’s top executive and senior staff to determine if the deal represents a merger under the country's guidelines, the agency said Tuesday.
- Microsoft announced plans in March to bring on Inflection co-founder and CEO Mustafa Suleyman alongside other Inflection staffers to lead a new division called Microsoft AI. Now, U.K. regulators are investigating whether the move represents "a substantial lessening of competition within any market or markets in the United Kingdom for goods or services."
- In April, the regulatory body announced an invitation for public comment on partnerships and other arrangements between large tech companies and AI startups, including Microsoft's Inflection hires as well as its investment in French startup Mistral AI. Amazon's investment in Anthropic was also part of the call for comments.
Dive Insight:
Microsoft’s hiring of top Inflection talent is the latest big tech deal to land under the microscope of the U.K.'s open market watchdog.
The CMA launched a similar inquiry into Microsoft's OpenAI investment in December, seeking public comment as it assessed if the deal met the criteria of a merger under the 2002 Enterprise Act.
The U.K. has also closely scrutinized cloud providers, sounding the alarm on structurally anti-competitive features of the market in a May report.
The CMA's latest inquiry into the Inflection hires represents an opportunity for Microsoft to rethink its AI strategy, with a focus on "partnerships that promote diversity and uphold market integrity in alignment with their corporate values," said Phil Brunkard, executive counselor at Info-Tech Research Group, U.K.
"By prioritizing ethical considerations and inclusivity in their investments, Microsoft can mitigate risks of bias and other ethical concerns, ensuring that their solutions and the market as a whole benefit from a fair and balanced approach," Brunkard said in an email.
Microsoft said it plans to cooperate with the U.K. inquiry and is confident on the outcome of the probe.
“We are confident that the hiring of talent promotes competition and should not be treated as a merger," a company spokesperson said Tuesday in an email. "We will provide the U.K. Competition and Markets Authority with the information it needs to complete its inquiries expeditiously.”
