Months after the UK competition authorities probed into Microsoft’s acquisition of Inflection AI CEO Mustafa Suleyman and key members of his team’s staff, all concerns about competition have now been lifted.
In a statement on Wednesday, the Competition and Markets Authority (CMA) said that the transaction does not significantly harm competition in the AI industry. The CMA, after holding investigations for months, announced its conclusion that the deal would not meaningfully lessen competition among consumer chatbot providers or foundational model developers.
The investigation was preceded by Microsoft’s acquisition of Suleyman and several of his colleagues, such as Inflection AI co-founder and chief scientist Karén Simonyan, and incorporated them into the AI team. The decision made by Microsoft raised concerns, especially as tech giants continue to acquire AI talent and resources in a bid to dominate the growing sector. The CMA, after consultations with Microsoft, Inflection, competitors, the public, and other stakeholders, concluded that these hirings do not present a significant threat to market fairness.
UK regulators investigate Microsoft’s AI staffing moves
The investigation by the Competition and Markets Authority regarding Microsoft’s employment of Inflection AI employees was part of a bigger investigation regarding market share concerns about AI mergers and acquisitions, which started in April. As a consequence of this assessment, the CMA found the employment of Suleyman and some other employees to be ‘a relevant merger situation‘ within its reach.
Nonetheless, once the investigation progressed and the agency assembled information from various sources, it concluded that the deal would not result in a substantial reduction in competition, a concern often raised when large tech firms acquire smaller, innovative AI companies.
Microsoft spokesperson welcomed the conclusions of the CMA stating that an inquiry and examination of the facts confirmed the position of the company that the hiring of Inflection employees would not alter fair competition in the AI industry. This development is in line with Microsoft’s general strategy of enhancing its AI capabilities through partnerships and investments, particularly its multi-year, multi-billion-dollar partnership with OpenAI.
The changes introduced by Microsoft are made in a competitive environment in terms of AI activities. Other big players in the industry have similarly been diversifying and broadening their AI activity base through investment and collaborations. For example, in March, Amazon made an investment deal worth $4 billion into Anthropic, which is behind the chatbot Claude.
Anthropic’s Claude has since been integrated into Amazon’s AWS AI marketplace called AWS Bedrock. Google has also been busy trying to revive its DeepMind unit by bringing back Character.ai co-founders Noam Shazeer and Daniel De Freitas.
