Microsoft Cleared of Antitrust Concerns in Inflection AI Partnership by UK Regulator
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On Wed, 4 Sept, 4:11 PM UTC
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Microsoft Avoids UK Antitrust Investigation Into Acquisition Of 'Certain Assets' From Inflection AI - Microsoft (NASDAQ:MSFT)
Satya Nadella-led Microsoft Corp. MSFT has managed to avoid a comprehensive U.K. probe into its recruitment of staff from startup Inflection AI. What Happened: On Wednesday, the Competition and Markets Authority or CMA said that while Microsoft's acquisition of "certain assets" from Inflection does represent a "relevant merger situation" in the U.K., it does not anticipate a "substantial lessening of competition" due to this action, reported CNBC. The CMA initially referred Microsoft's recruitment of Inflection talent for a merger investigation in July, evaluating the potential for a "substantial lessening of competition" within the AI sector. However, after assessment, the CMA found no risk of such an outcome, while asserting that the agreement constituted an effective merger, the report noted. See Also: Elon Musk Says Brazilian Government Assets Can Be Seized After X, SpaceX Property Confiscated: 'Hope Lula Enjoys Flying Commercial' While Microsoft has not publicly revealed any details of a licensing arrangement with Inflection, it is known that the tech giant incorporated several members of Inflection's 70-person team. Meanwhile, the CMA is also conducting a separate investigation into Microsoft's multibillion-dollar investment in ChatGPT-maker OpenAI. In April 2024, the EU said that Microsoft's about $13 billion investment in OpenAI will not face a formal investigation by their merger regulators. CMA is also examining whether the partnership between Amazon.com Inc. and AI firm Anthropic qualifies as a merger that could potentially harm competition, the report noted. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: Microsoft announced the recruitment of Mustafa Suleyman, co-founder of Google DeepMind and Inflection, along with several other key Inflection employees in March 2024. Suleyman was named as the company's executive vice president and CEO of Microsoft AI, a new division concentrating on AI products. This development was seen as Microsoft's strategic move to diversify its AI risk. While the CMA has cleared the tech giant in this regard, Microsoft is also under FTC investigation. In July, Microsoft reported its fourth-quarter earnings highlighting a 21% YoY increase in cloud revenue, with the company highlighting its commitment to leading the AI era. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Here's What Nvidia's Jensen Huang Had To Say About AMD CEO And His Cousin Lisa Su Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs
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Microsoft dodges in-depth UK probe into hiring of staff from AI firm Inflection
LONDON -- Microsoft's hiring of employees from Inflection AI, the artificial intelligence startup started by DeepMind co-founder Mustafa Suleyman, has been cleared by the U.K.'s competition regulator and will not face an in-depth competition investigation in the country. The Competition and Markets Authority said in a statement Wednesday that the U.S. tech giant's deal to acquire "certain assets" from Inflection does count as a "relevant merger situation" in Britain, but that it ultimately "does not give rise to a realistic prospect of a substantial lessening of competition (SLC) as a result of horizontal unilateral effects." In March, Microsoft announced the hiring of Suleyman from Inflection, along with a number of other key employees at the firm. Suleyman was appointed Microsoft's executive vice president and CEO of Microsoft AI. The newly formed unit of Microsoft focused on its artificial intelligence products, including Copilot, the company's AI assistant, which it integrated into Windows and Microsoft 365 In addition to Suleyman's new role, the Redmond, Washington-based tech giant also selected Karen Simonyan to join Microsoft as its chief scientist, reporting to Suleyman. Both Suleyman and Simonyan were former employees of DeepMind, the Google-owned AI lab. In July, the CMA referred Microsoft's hiring of Inflection talent for an initial merger investigation, on the grounds that it was assessing the potential that the constituted a merger under U.K. rules and therefore could result in a "substantial lessening of competition" within the AI sector. However, on Wednesday, the CMA said that, after taking some time to evaluate Microsoft's arrangement with Inflection, it did not find any risk of a substantial lessening of competition. It did, however, maintain its view that the agreement constituted an effective merger. Microsoft was not immediately available for comment when contacted by CNBC Wednesday. The CMA had not previously spelled out exactly how the hiring of Inflection AI employees could undermine competition. The regulator said it assessed Microsoft's "entry into associated arrangements with Inflection," in addition to the recruitment of the employees. On Wednesday, the regulator said that those arrangements included a "nonexclusive licensing deal to utilise Inflection IP [intellectual property] in a range of ways." Microsoft has not publicly revealed any details of a licensing arrangement with Inflection -- only that it took on "several members" of the company's 70-person team. Reuters and The Wall Street Journal reported that the firm paid Inflection $650 million in licensing fees to resell its AI models via its Azure cloud computing platform. The Inflection arrangement isn't the only pact with a Big Tech company and AI startup that regulators in the U.K. are assessing. The CMA has a separate ongoing probe into Microsoft's multibillion-dollar investment into AI giant OpenAI. It is also investigating whether a tie-up between Amazon and AI company Anthropic constitutes a merger that may harm competition. Microsoft and Amazon have both denied that any of their partnerships with smaller AI firms constitute mergers, stressing that the companies they're investing in and partnering with are operating independently. Meanwhile, the Federal Trade Commission in the U.S. is also reviewing multiple deals between Big Tech companies and AI startups -- including Microsoft's arrangement with Inflection.
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Microsoft Spared U.K. Antitrust Investigation Over Ties to Inflection AI -- Update
U.K. antitrust officials said Microsoft's hiring of former employees from Inflection AI and its partnership with the startup didn't pose a threat to competition, a victory for the tech giant that has been facing significant regulatory scrutiny on both sides of the Atlantic in recent months. The U.K's Competition and Markets Authority launched a probe in July to determine whether Microsoft's ties with Inflection AI should be considered a de facto merger that could stifle competition in the country. Officials have now concluded that this wasn't the case and said they wouldn't open a formal investigation. Microsoft earlier this year hired Inflection AI's co-founder and almost all of its employees and agreed to pay the startup around $650 million as part of a licensing fee to resell its technology. Big tech firms have been splurging on AI startups to get their hands on what they see as promising AI features that they hope to cash in on further down the line. "We are pleased that after an investigation and review of the facts, the CMA has concluded that our hiring of Inflection employees raises no competition concerns," a Microsoft spokesperson said. The decision from Britain's antitrust watchdog offers Microsoft some breathing space as the tech giant faces more scrutiny in the U.K. and the U.S. British officials are still looking at whether Microsoft's partnership with ChatGPT maker OpenAI should be considered a de facto merger. Meanwhile, the Wall Street Journal reported in June that the Federal Trade Commission was investigating whether Microsoft structured its deal with Inflection AI in a manner that would avoid a government antitrust review. The transatlantic probes underscore the growing pressure that tech giants face to justify their arrangements with AI startups. That scrutiny has already forced Microsoft to loosen the strings on some arrangements. In July, the group relinquished its seat as an observer on OpenAI's board after Microsoft realized its position had unsettled some antitrust officials. In the U.K., officials are also looking at whether Amazon.com's $4 billion investment in AI startup Anthropic poses a threat to competition, with an initial decision due by Oct. 4. Meanwhile, in the U.S., the Federal Trade Commission launched an inquiry into generative AI partnerships earlier this year, ordering companies to provide information regarding recent investments into startups. That probe includes Amazon and Anthropic as well as Microsoft and OpenAI. News Corp, owner of Dow Jones Newswires and the Wall Street Journal, has a content-licensing partnership with OpenAI.
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Microsoft-Inflection AI partnership does not qualify for investigation: UK regulator
Microsoft's (NASDAQ:MSFT) hiring of Inflection AI employees does not qualify for an investigation, the U.K.'s antitrust agency said on Wednesday. "The Competition and Markets Authority has found that the transaction described below involving the acquisition by Microsoft Corporation ... of certain assets of Inflection AI, Inc. ..., is a relevant merger situation falling within the merger control jurisdiction of the CMA but that the transaction does not give rise to a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects," the CMA said in a release. As part of the hires, Microsoft brought in Inflection AI co-founders Mustafa Suleyman and Karén Simonyan to help lead its consumer artificial intelligence unit, focused on Copilot. Suleyman previously founded DeepMind, which was bought by Google (GOOG) (GOOGL). The CMA also said in May that Microsoft's partnership with French AI company Mistral did not qualify for investigation. Microsoft invested multiple billions of dollars into Inflection AI competitor OpenAI at the start of last year amid the artificial intelligence boom. That deal has attracted scrutiny on both sides of the Atlantic Ocean.
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UK Antitrust Regulators Clear Microsoft's Partnership With Inflection AI
Microsoft's partnership with Inflection AI is also reportedly under investigation by U.S. regulators. The U.K.'s Competition and Markets Authority (CMA) said Wednesday it determined Microsoft's (MSFT) hiring of former Inflection AI employees and related agreements with the AI startup do not pose a threat to competition. The CMA had opened an investigation into the partnership to examine its impact on competition in the AI market and whether it effectively created a merger after Microsoft reportedly paid $650 million to license Inflection's tech and hired senior members of the Inflection team. The antitrust regulator said that while it found the transaction could be considered a "relevant merger situation," that it "does not give rise to a realistic prospect of a substantial lessening of competition." The investigation's closure could be good news for big tech companies amid regulatory scrutiny with a particular focus on AI partnerships. Microsoft's partnership with Inflection AI is also reportedly under investigation in the U.S., with the Federal Trade Commission (FTC) examining possible violations of antitrust rules for mergers and acquisitions (M&A). Microsoft shares were little changed in intraday trading Wednesday following the news, and have gained about 9% from the start of the year.
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UK clears Microsoft's partnership with Inflection AI
(Reuters) - Britain's competition regulator, on Wednesday, cleared Microsoft's hiring of some former staff of Inflection AI and its partnership with the startup and said the deal did not required a deeper investigation. The Competition and Markets Authority began a probe in July to examine if the deal might lead to competition concerns in the country since both companies develop and supply consumer chatbots. The CMA said that even before being bought, Inflection had a small portion of UK visits for chatbots and AI tools and, unlike its rivals, couldn't significantly grow or maintain its chatbot users. In March, Microsoft hired Mustafa Suleyman, co-founder of Google DeepMind, as head of its newly-created AI unit. It also hired a number of employees from Inflection, which he set up in 2022. Reuters reported that Microsoft had agreed to pay about $650 million as part of the deal, which gave it access to Inflection's AI models and enabled the startup to reimburse its investors, who include former Bill Gates and Google CEO Eric Schmidt. (Reporting by Radhika Anilkumar in Bengaluru; Editing by Mrigank Dhaniwala and Savio D'Souza)
[7]
CMA clears Microsoft's hiring of Inflection leadership
Deal can't lessen competition if AI minnow wasn't much of a competitor Microsoft's "acquihire" of Inflection AI was today cleared by UK authorities on the grounds that the startup isn't big enough for its absorption by Microsoft to affect competition in the enterprise AI space. The Competition and Markets Authority (CMA) confirmed the conclusion of its investigation by publishing a summary of its decision. While the CMA found that Microsoft's recruitment of Inflection co-founders Mustafa Suleyman and Karén Simonyan, along with other Inflection employees, in March 2024 to lead Microsoft's new AI division did create a relevant merger situation, a bit of digging indicated everything was above board. As we explained when the CMA kicked off its investigation in July, the agency's definition of relevant merger situations includes instances where two or more enterprises have ceased to be distinct, and when the deal either exceeds £70 million or 25 percent of the national supply of a good or service. In both cases, the CMA determined [PDF], the Microsoft/Inflection deal met the criteria. As to whether the matter could lead to a substantial lessening of competition, that's where the CMA decided everything was OK. "Prior to the transaction, Inflection had a very small share of UK domain visits for chatbots and conversational AI tools and ... had not been able to materially increase or sustain its chatbot user numbers," the CMA said. "Competitors did not regard Inflection's capabilities with regard to EQ [emotional intelligence, which was an Inflection selling point] or other product innovation as a material competitive constraint." In addition, the CMA said Inflection's foundational model offering wouldn't exert any "material competitive constraint" on Microsoft or other enterprise foundational model suppliers as none of the potential Inflection customers the CMA spoke with during its probe identified any features that made Inflection's software more attractive than other brands. Ouch. "This is really what the CMA's Phase 1 process is for - a route to gather and properly assess all the [information] ... before reaching an evidence-based conclusion," CMA executive director Joel Bamford wrote on LinkedIn about the decision. "Inflection AI is not a strong competitor to the consumer chatbots that Microsoft has developed directly (Copilot) and in partnership with OpenAI (ChatGPT)," Bamford added. "On this basis, we cleared the transaction."
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UK regulator greenlights Microsoft's Inflection acquihire, but also designates it a merger
Good news for Microsoft: The U.K.'s antitrust regulator says that the tech titan's high-profile acquihire of the team behind AI startup Inflection doesn't cause competition concerns, and thus it won't be pursuing a full-scale investigation. However, the Competition and Markets Authority (CMA) says that the deal does fall under its regulatory purview as a "relevant merger situation," meaning similar deals in the future may still be investigated on competition grounds -- even if a full acquisition has not taken place. The 'quasi-merger' Microsoft launched a new consumer AI division back in March, spearheaded by the founders of Inflection which included Google DeepMind co-founder Mustafa Suleyman. CEO Satya Nadella confirmed that a number of other Inflection AI members had joined Microsoft's new AI unit, such as AI scientist Jordan Hoffmann who is now heading up Microsoft's U.K. AI hub in London. Back in July, CMA revealed that it was launching a "phase 1" merger inquiry into the deal, kickstarting an investigation to gather evidence and decide whether to proceed with a full probe. Central to the initial phase was whether the deal could in fact be investigated as a "merger," given that Microsoft hadn't actually acquired Inflection AI. And if it does qualify as a merger, whether further action is required to counter competition concerns. At the heart of all this is a growing push by big tech companies to circumvent regulatory scrutiny around AI, powered by a new M&A approach some have dubbed the "quasi-merger" -- this could involve anything from strategic investments, to -- as we've seen with Microsoft and Inflection -- hiring startup founders and technical talent.
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British competition watchdog clears Microsoft in AI hirings
Sept. 4 (UPI) -- The British competition watchdog on Wednesday cleared Microsoft's hiring of several key members of Inflection AI, including its co-founder, saying it does not rise to a "relevant merger situation," under law. The Competition and Markets Authority had investigated Microsoft for hiring away top executives from the artificial intelligence company. Inflection AI's co-founder Mustafa Suleyman was hired to become executive vice president and CEO of Microsoft AI. The CMA initially said the hiring of Suleyman and other influential executives could amount to a merger under British law and lessen competition. On Wednesday, however, the authority backed away from that assumption and cleared the U.S. tech giant. "The CMA found that the transaction does not give rise to a realistic prospect of an [substantial lessening of competition] as a result of horizontal unilateral effects arising from the loss of competition in the development and supply of consumer chatbots," the CMA said in a statement. The CMA, though, is not finished with Microsoft. The authority is still investigating Microsoft's partnership with leading AI developer OpenAI. The CMA is also investigating a similar matchup of Amazon and the AI firm Anthropic over similar merger concerns. The Federal Trade Commission is conducting its own investigation into Microsoft and Inflection AI. Microsoft and Amazon have both argued that their AI hiring does not constitute mergers with the companies they are hiring from.
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Microsoft Cleared by UK Watchdog Over Ex-Inflection Staff Hires
Microsoft Corp.'s investment into Inflection AI avoided in-depth scrutiny from the UK antitrust watchdog after it ruled that the hiring of ex-employees from the startup didn't cause any regulatory concerns. The Competition and Markets Authority said Wednesday that while the tie-up was classed as a merger, it won't substantially reduce competition in the sector.
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Microsoft's hiring of Inflection staff: Company gets 'second good news' in 3 months - Times of India
Microsoft's decision to hire staff from the Inflection AI startup to join its new AI unit raised concerns in the UK, prompting an investigation into potential competition reduction. However, after a month-long initial inquiry, the UK's Competition and Markets Authority (CMA) has given Microsoft the green light, clearing the company of any wrongdoing in reducing competition. "The CMA has cleared Microsoft's hiring of certain former employees of Inflection and its entry into associated arrangement with Inflection," the regulator said. In March, the tech giant hired Mustafa Suleyman, co-founder of Google DeepMind, as head of its newly-created AI unit, along with a number of employees from the startup as a part of the deal which is reported to have cost the Windows-maker $650 million. The CMA had set a September 11 deadline to decide whether the investigation will progress into a second phase. Why CMA cleared Microsoft's hiring of Inflection staff According to a post by Joel Bamford, executive director, CMA, on LinkedIn, "the evidence did not show competition concerns requiring a more in-depth Phase 2 review". " Inflection AI is not a strong competitor to the consumer chatbots that Microsoft has developed directly (Copilot) and in partnership with OpenAI (ChatGPT). On this basis, we cleared the transaction," he added. CMA gives green light to Microsoft-Mistral AI deal in May Back in May, the CMA announced it will not launch a formal investigation into the partnership between Microsoft and Mistral AI, a French AI startup that received a $16 million investment from Microsoft earlier this year. This decision came several weeks after the CMA sought feedback from the industry on the potential implications of this tie-up. Ultimately, the CMA concluded that the partnership didn't meet the criteria for a full-scale investigation under the UK's merger regulations. The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.
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UK clears Microsoft's partnership with Inflection AI
The CMA said that even before being bought, Inflection had a small portion of UK visits for chatbots and AI tools and, unlike its rivals, couldn't significantly grow or maintain its chatbot users. In March, Microsoft hired Mustafa Suleyman, co-founder of Google DeepMind, as head of its newly-created AI unit. It also hired a number of employees from Inflection, which he set up in 2022. Reuters reported that Microsoft had agreed to pay about $650 million as part of the deal, which gave it access to Inflection's AI models and enabled the startup to reimburse its investors, who include former Bill Gates and Google CEO Eric Schmidt. (Reporting by Radhika Anilkumar in Bengaluru; Editing by Mrigank Dhaniwala and Savio D'Souza)
[13]
Microsoft-Inflection Deal Cleared by UK Antitrust Regulator
A UK regulator has cleared Microsoft's deal with the AI startup Inflection to hire most of its staff and pay for its intellectual property, closing its investigation into the deal. The UK Competition and Markets Authority said on Wednesday that it had determined that Microsoft's unusual arrangement to hire Inflection's staff and license its technology should be considered a "merger" subject to
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The UK's Competition and Markets Authority (CMA) has decided not to investigate Microsoft's acquisition of certain assets from Inflection AI, including the hiring of key employees. This decision comes after a review of the partnership between the two companies.
UK Regulator's Decision on Microsoft-Inflection AI Deal
The UK's Competition and Markets Authority (CMA) has announced that it will not pursue an antitrust investigation into Microsoft's acquisition of certain assets from Inflection AI 1. This decision comes after a thorough review of the partnership between the two companies, which involved Microsoft hiring key employees from Inflection AI and entering into a licensing agreement for the AI firm's technology 2.
Details of the Partnership
The partnership between Microsoft and Inflection AI, announced in March 2024, raised initial concerns about potential anti-competitive practices. Microsoft agreed to hire approximately 100 employees from Inflection AI, including co-founder Mustafa Suleyman and chief scientist Karén Simonyan 3. Additionally, Microsoft secured a license to use Inflection's technology, which is behind the AI chatbot Pi.
CMA's Assessment
The CMA conducted a preliminary assessment of the deal to determine whether it qualified for investigation under the merger rules. After careful consideration, the regulator concluded that the transaction did not meet the criteria for a relevant merger situation 4. This decision effectively clears Microsoft of any immediate antitrust concerns in the UK regarding this particular partnership.
Implications for the AI Industry
This ruling is significant for the rapidly evolving AI industry, as it sets a precedent for how regulatory bodies may approach similar deals in the future. The CMA's decision suggests that the acquisition of talent and technology licensing agreements may not necessarily trigger antitrust investigations, provided they do not substantially lessen competition in the market 5.
Microsoft's Growing AI Presence
The partnership with Inflection AI is part of Microsoft's broader strategy to strengthen its position in the AI field. By acquiring top talent and innovative technologies, Microsoft aims to enhance its AI capabilities and compete more effectively with other tech giants. This move aligns with the company's significant investments in OpenAI and its integration of AI technologies across its product lineup.
Regulatory Landscape for Tech Giants
While Microsoft has avoided an investigation in this instance, the decision underscores the ongoing scrutiny that major tech companies face from regulatory bodies worldwide. As AI technologies continue to advance and play an increasingly important role in various industries, regulators are likely to remain vigilant in monitoring potential anti-competitive behaviors and market consolidation in the tech sector.
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UK Launches Probe into Microsoft's Hiring of Inflection AI Staff
The UK's Competition and Markets Authority (CMA) has initiated an investigation into Microsoft's recent hiring of Inflection AI's founder and key staff members. This move raises concerns about potential anti-competitive practices in the rapidly evolving AI industry.
30 Sources
EU Antitrust Regulators Won't Scrutinize Microsoft's Hiring of Inflection AI Staff
The European Union's antitrust regulators have decided not to investigate Microsoft's recent hiring of staff from artificial intelligence startup Inflection. This decision comes amid growing scrutiny of Big Tech's AI investments and acquisitions.
7 Sources
UK Watchdog Clears Amazon's $4 Billion AI Deal with Anthropic
The UK's Competition and Markets Authority (CMA) has approved Amazon's $4 billion investment in AI startup Anthropic, finding no substantial competition concerns. This decision paves the way for increased collaboration in AI development between the two companies.
19 Sources
UK Antitrust Watchdog Clears Google's $2 Billion Investment in Anthropic AI
The UK's Competition and Markets Authority (CMA) has concluded that Google's $2 billion investment in AI startup Anthropic does not warrant a full investigation under merger rules, stating that Google hasn't gained "material influence" over Anthropic.
9 Sources
UK Competition Watchdog Clears Amazon-Anthropic Partnership
The UK's Competition and Markets Authority (CMA) has decided not to investigate the partnership between Amazon and AI startup Anthropic under merger laws, citing Anthropic's low UK turnover and insufficient market share.
3 Sources
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