Microsoft’s recent “acqui-hiring” deal with Inflection AI has attracted antitrust scrutiny in the UK.
In March, Microsoft paid $650 million to AI firm Inflection for a licensing fee, allowing it to use the company’s AI models and hire most of its employees, including CEO Mustafa Suleyman.
In the U.S., the Federal Trade Commission (FTC) is investigating whether Microsoft structured this deal to avoid regulatory scrutiny by hiring Inflection’s staff rather than purchasing the company outright. Normally, mergers valued over $119 million must be reported to federal antitrust authorities, but the FTC is examining if Microsoft tried to bypass these requirements.
The UK’s Competition and Markets Authority (CMA) has also started investigating the deal. The agency stated it has enough information regarding Microsoft’s actions to determine if the deal is anti-competitive. A decision on whether to proceed with a more detailed investigation will be made by September 11.
A Microsoft spokesperson stated, “We are confident that the hiring of talent promotes competition and should not be treated as a merger,” adding that they will fully cooperate with the CMA’s inquiries.
Tech companies are increasingly scrutinized for anti-competitive practices, especially with the rising importance of AI. According to consulting firm EY, tech sector deals in the U.S. reached $186 billion in the first half of 2024, the highest among all industries.
In addition to Microsoft’s deal with Inflection AI, other tech giants are also making significant AI-related moves. Amazon invested $4 billion in AI startup Anthropic, and Apple acquired Canadian startup DarwinAI earlier this year, continuing its pattern of AI acquisitions.
Consequently, the Department of Justice and the FTC have reportedly agreed to investigate Microsoft, Nvidia, and OpenAI for potential anti-competitive behavior in the AI industry, according to The New York Times.