Microsoft's Hiring of Inflection AI Staff Under Investigation by UK Regulatory Authority

The Competition and Markets Authority (CMA) in the UK is currently conducting an investigation into Microsoft's hiring of employees from artificial intelligence (AI) start-up firm, Inflection AI. The key personnel from Inflection AI left the company in March and joined Microsoft, with Mustafa Suleyman, one of the co-founders, taking the position of head of Microsoft's recently-formed AI division. The CMA aims to determine whether this hiring process constitutes a merger and if it potentially impacts competition in the market.

The CMA's probe, called a phase one inquiry, was initiated after seeking public input on Microsoft's recruitment of Inflection staff back in April. Microsoft responded, stating that the hiring aimed to promote competition, dismissing the notion of a merger. The CMA has also noted that Microsoft and Inflection AI entered into a non-exclusive licensing deal regarding the use of AI models developed by the company.

Should the CMA uncover enough evidence suggesting a merger that could hinder competition, a further in-depth investigation will be carried out. A decision on clearing the transaction or proceeding with a more detailed examination is expected to be made by September 11.

Inflection AI specializes in generative AI, which involves using computer-trained models to create media such as text and images based on extensive datasets. This particular field has attracted significant attention, leading to numerous major deals between industry giants, like Microsoft's investment in OpenAI and Google's incorporation of generative AI products into its various services.

The CMA has previously expressed concerns regarding the dominance of big tech companies in the AI sector. Their worries center around the potential for larger firms to control access to AI hardware and products, posing risks to healthy competition and stifling innovation. Sarah Cardell, Chief Executive of the CMA, highlighted the intricate network of AI partnerships among tech giants like Google, Apple, Microsoft, Meta, and Amazon and emphasized the importance of fair competition and consumer protection in the AI sector.

Overall, the investigation into Microsoft's hiring of Inflection AI staff reflects the growing scrutiny and awareness surrounding the influence of major tech companies on the AI landscape and the potential impact on competition and innovation in the industry.