Microsoft Under Investigation by UK Antitrust Authorities Following Acquisition of Inflection AI Talent

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This development occurs four months post Microsoft CEO Satya Nadella’s inauguration of a novel consumer AI sector, led by Inflection AI’s co-founders, among them deep learning expert Karén Simonyan and Google DeepMind’s co-founder Mustafa Suleyman. Concurrently, Nadella disclosed that several Inflection AI team members had transitioned to Microsoft’s AI department (with Bloomberg reporting that a significant number had made the move), including AI specialist Jordan Hoffmann, now at the helm of Microsoft’s AI operations in London, U.K.

Central to these concerns is the strategy by major tech entities, using M&A tactics that aim to sidestep regulatory oversight in AI, a method some refer to as the “quasi-merger.” This could range from key investments to acquiring startup talents and leaders.

Widespread Investigations

The disclosure of this investigation by the CMA is in line with expectations, following its April announcement of preliminary investigations into various AI partnerships including Microsoft’s involvement with Mistral AI, a notable French startup. The CMA quickly determined that Microsoft’s minor stake did not warrant a formal investigation under the prevailing merger guidelines, as the company’s less than 1% ownership would unlikely influence the startup’s strategic direction.

Moreover, the CMA is examining Amazon’s substantial $4 billion investment into Anthropic, a U.S. AI firm, and is anticipated to instigate a complete investigation into Microsoft’s partnership with ChatGPT creator OpenAI, mirroring actions by the European Commission.

With the phase 1 investigation now active, the CMA has a deadline until September 11 to decide if Microsoft’s hiring practices constitute a “merger” and whether such actions could potentially harm competition within the U.K. Should the CMA find sufficient grounds, a detailed “phase 2” inquiry will follow, lasting about six months.