The UK Competition and Markets Authority (CMA) has announced This Tuesday the start of a formal investigation to verify whether the agreement between Microsoft and Inflection AI does it really constitute a “merger” and, if so, whether it could have a negative impact on the sector.
This is not the first time that the British regulator and the American company have clashed. In the past, the battle between these two names was centered on the long and tedious process of acquiring Activision Blizzard for 69 billion dollars.
Microsoft says there is no merger, CMA not convinced
To better understand what is happening we must go back a few months. At the beginning of this year It came to light that Microsoft had finalized a unusual agreement with Inflection AI. The company would receive $650 million in exchange for licensing its software and giving up some of its staff.
Until then, Inflection AI had planned to launch a chatbot called PI to compete with Copilot, ChatGPT and Gemini, but after the aforementioned move, many things changed within the firm. First, it shifted its focus to the corporate environment. Second, some of its talent was hired by Microsoft.
Mustafa Suleyman, one of the co-founders of the prestigious AI laboratory DeepMind, served as CEO at Inflection AIHowever, he left this role and became head of artificial intelligence at Microsoft. Along with him, most of the employees left Inflection AI to join the Redmond firm.
Mustafa Suleyman
These moves set off alarm bells at the CMA, which in April launched a “phase 1 investigation” open to comments. On July 16, the procedure was made official. Specifically, the British regulator wants to know whether the agreement between Microsoft and Inflection AI should be covered by the merger provisions of the Companies Act 2002. If so, they add, they are looking to verify whether it could present a decrease in competition.
We will have to wait until September 11 of this year to find out if the agreement receives the CMA’s approval or if the investigation moves to a new phase with closer scrutiny.
This is not the first time Microsoft has come under pressure from regulators for its actions in the AI field. The company led by Satya Nadella, which invested more than $10 billion in OpenAI, had secured an observer seat on the startup’s board of directors. However, According to leakswas forced to abandon this position. Apple, which was also going to have a similar position, chose to follow the same path.
Images | Maxim Hopman | Coolcaesar | Village Global
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