Microsoft’s deal with Inflection AI is under antitrust scrutiny in the UK.
The tech giant paid artificial intelligence firm Inflection $650 million to use its AI models and hire most of its employees, including CEO Mustafa Suleyman, in March.
In the U.S., the Federal Trade Commission has been investigating whether Microsoft structured the deal to avoid regulatory scrutiny by hiring Inflection staff and paying a fee instead of buying the company outright. Mergers valued at over $119 million must be reported to federal antitrust agencies, and the FTC is examining if Microsoft’s deal was designed to bypass these requirements.
On Tuesday, the UK’s Competition and Markets Authority announced it is also investigating the deal. The agency stated it had enough information to launch an investigation into whether the deal is anti-competitive, with a decision on further investigation expected by Sept. 11.
A Microsoft spokesperson said, “We are confident that the hiring of talent promotes competition and should not be treated as a merger. We will provide the UK Competition and Markets Authority with the information it needs to complete its inquiries expeditiously.”
Tech giants have been under scrutiny for potential anti-competitive behavior, especially with AI driving competition and mergers. In the first half of 2024, tech sector deals in the U.S. totaled $186 billion, the largest among industries, according to consulting firm EY.
In addition to Microsoft’s deal with Inflection, Amazon invested $4 billion in AI startup Anthropic, and Apple acquired Canadian startup DarwinAI earlier this year.
As a consequence, the Department of Justice and the FTC are reportedly set to investigate Microsoft, Nvidia, and OpenAI for potential anti-competitive behavior in the AI space, according to The New York Times.