Mustafa Suleiman, co-founder and CEO of Inflection AI UK Ltd., speaking at the World Economic Forum in Davos, Switzerland on January 18, 2024.
Stefan Wermuth | Bloomberg | Getty Images
London – Microsoft Artificial intelligence startup Inflection’s hiring of former employees is the subject of early merger investigation in the UK
The UK Competition and Markets Authority said on Tuesday that the hiring of Inflexion co-founder Mustafa Suleiman and most of the company’s staff constitutes a merger under UK rules and should be evaluated to determine whether it could lead to less competition in the AI ​​sector.
If it finds reason to investigate further, the CMA can refer the matter to a more detailed investigation, known as “phase two”. The CMA said it will announce its decision on whether to refer the matter to a phase two investigation by September 11.
“We believe that hiring great talent promotes competition and should not be treated as a merger,” a Microsoft spokesperson told CNBC in a statement on Tuesday.
The spokesman added that the company would provide the CMA with any information it needs to complete its investigation.
Microsoft announced in March that it had hired Suleiman from Inflexion, along with several other key Microsoft employees.
Suleiman was named executive vice president of Microsoft and CEO of Microsoft AI, a newly formed division of the company focused on artificial intelligence products, including Copilot, an AI assistant integrated into the company’s Windows and Microsoft 365 software.
In addition to appointing Suleiman to the senior executive position, the Redmond, Washington-based tech giant also added Karen Simonyan to the company as chief scientist, reporting directly to Suleiman.
Both Suleiman and Simonyan were former employees of DeepMind, Google’s AI research lab.
In its statement on Tuesday, the CMA did not specify how the deal could harm competition, but the regulator had previously said it was assessing Microsoft’s “entering into relevant contracts with Inflexion” in addition to hiring employees.
According to reports from Reuters and the Wall Street Journal, Microsoft paid Inflection $650 million in licensing fees to resell Inflection’s AI models via its Azure cloud platform.
Meanwhile, when Microsoft announced the Inflexion hires, it did not disclose details of its licensing agreement with the company, saying only that it had hired “several members” of the company’s 70-person team.
Regulators are trying to determine whether this case, and certain hires from Inflexion, led to a merger that could ultimately lead to a “substantial lessening of competition” in the AI ​​field.
Earlier this year, the CMA said it was dropping a separate investigation into Microsoft’s equity investment and partnership with French AI startup Mistral.
The watchdog previously said another transaction Amazon The partnership with Anthropic, a prominent AI startup, amounts to a merger.
The CMA has not yet said whether it will launch a formal review of the arrangement.
Microsoft has invested more than $13 billion in OpenAI. In addition to funding the company, Microsoft is also using OpenAI’s GPT large-scale language models to power its own AI products, including the Copilot AI platform and the Bing search engine.
And until last week, Microsoft held a non-voting observer seat on OpenAI’s board of directors, reportedly a concern for regulators who are investigating the deal over competition concerns.
Amazon has invested $4 billion in Anthropic and is offering its Claude-based models on its own managed AI service, Amazon Bedrock.
