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The UK’s Competition and Markets Authority (CMA) is now investigating Microsoft for hiring former Inflection AI employees and acquiring licenses to use its technology. The situation has also caught the attention of the FCC and keeps the EU vigilant for possible effects on competition.
Earlier this year, Microsoft AI was officially introduced as a new division of the company. Since then, Microsoft has been hiring high-profile talent to boost it, such as Mustafa Suleyman. The company also hired most of the staff from the startup Inflection AI. In addition, Microsoft paid around $650 million to license Inflection AI’s technology. So, while the company did not officially buy the startup, the end result could be quite similar to that of a merger.
The UK’s CMA now investigating if Microsoft’s hiring of Inflection AI staff was a disguised merger
Since it was not an official merger, the process did not pass through the scrutiny of antitrust regulators. This situation caused multiple organizations, such as the EU and the Federal Trade Commission (FCC), to investigate the matter. Now, the CMA of the UK joins the list of organizations examining whether everything has been done according to the law.
Phase one of the CMA investigation will conclude on September 11. That day, depending on the result, they can dismiss the case or move to phase two to begin a more in-depth one. The CMA seems to consider that the hiring of Inflection AI staff and the acquisition of the startup’s technology could be a disguised merger. Microsoft would have done this to skip the requirements of official company mergers.
Although it was not officially a merger, the outcome is similar to one. The CMA wants to ensure that the process will not have a negative impact on competition in the UK market.
Microsoft claims to be complying with the law
Microsoft sent a statement to Bloomberg in this regard. The statement says: “We are confident that the hiring of talent promotes competition and should not be treated as a merger.” So, the company seems to be sure that the law supports its actions.
Amid pressure from regulators, Microsoft has taken some actions. For example, it resigned from its non-voting observer seat on OpenAI’s board. This case is also under vigilance by regulatory entities. Although the company did not officially purchase OpenAI, it has invested more than $10 billion.