Microsoft’s “acqui-hiring” agreement with Inflection AI is now attracting antitrust scrutiny in the UK.
The tech giant paid a $650 million “licensing fee” to Inflection AI for using its AI models and hired most of its employees, including CEO Mustafa Suleyman, in March.
In the U.S., the Federal Trade Commission is reportedly investigating whether Microsoft structured the deal to avoid regulatory scrutiny by hiring Inflection staff and paying the fee instead of outright buying the company. Mergers exceeding $119 million must be reported to federal antitrust agencies, and the FTC is examining if this deal was designed to circumvent these rules.
On Tuesday, the Competition and Markets Authority in the UK announced it was also investigating the deal. The agency stated it had “sufficient information” to probe whether Microsoft’s actions were anti-competitive. A decision on further investigation will be made by Sept. 11.
A Microsoft spokesperson stated, “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 face increased scrutiny for anti-competitive behavior as AI competition and mergers rise. In the first half of 2024, U.S. tech sector deals totaled $186 billion, the highest among all industries, according to EY.
Beyond Microsoft’s deal with Inflection, Amazon invested $4 billion in AI startup Anthropic, and Apple purchased Canadian startup DarwinAI, continuing its pattern of discreet AI acquisitions.
As a result, the Department of Justice and the FTC have reportedly agreed to investigate Microsoft, Nvidia, and OpenAI for potential anti-competitive behavior in the AI sector, according to The New York Times.