UK competition regulators have stepped up their investigations into Microsoft’s artificial intelligence investments, announcing a formal probe into dealings with Inflection AI.
The Competition and Markets Authority asked for “views” on AI partnerships and other arrangements back in April. That request covered Microsoft’s “partnership” with French AI startup Mistral AI, and Redmond’s hiring of former employees and “associated arrangements” with Inflection AI.
Those employees include Mustafa Suleyman, one of DeepMind’s cofounders, and other Inflection staffers such as cofounder Karen Simonyan.
At the same time, Inflection said it would “lean into our AI studio business, where custom generative AI models are crafted, tested and fine-tuned for commercial customers” and host its model on…Microsoft Azure.
In April, the CMA said it had “not formed any conclusions on whether the deals fall within UK merger rules or raise competition concerns in the UK.”
However, the watchdog yesterday announced a “new merger” inquiry into the Inflection AI hirings, with a September 11 deadline for a phase 1 decision.
READ MORE: Google and AWS turn on Microsoft as UK competition watchdog probes cloud industry
In a statement, the CMA said it has “sufficient information in relation to Microsoft Corporation’s hiring of certain former employees of Inflection AI, Inc. (Inflection) and its entry into associated arrangements with Inflection (the Transaction), to enable it to begin an investigation for the purposes of deciding whether to make a reference for a phase 2 investigation.”
Phase 2 means a “merger” will be “investigated by groups drawn from an independent panel of experts who are not employees of the CMA” with a formal decision as to whether a deal impacts competition.
Microsoft told Reuters that it would give the CMA all the information it required but was “confident the hiring of talent promotes competition and should not be treated as a merger.”
The CMA announced in May that the Mistral deal did not qualify for investigation, but the Microsoft/OpenAI and Amazon/Anthropic probes are ongoing.
The agency is also investigating the state of competition in the cloud market, and noted last month that Microsoft and AWS had “considerable power”.
In the initial responses to the CMA, Microsoft, AWS, and Google all claimed the market was the epitome of competition. However, AWS and Google claimed that Microsoft’s software licensing practices were an exception to this. Needless to say, Microsoft disputed this.
We'll bring you all the news as it happens.
