Microsoft Faces Antitrust Probe in the UK for Mass Hiring from AI Startup Inflection

• Microsoft recently hired Mustafa Suleyman (co-founder of AI startup Inflection) and a bunch of other people from AI startup Inflection, for which it is now facing an investigation from Britain's Competition and Markets Authority.
• The authorities will check whether this mass recruitment can be treated as a merger under UK laws and if it's hindering competition in the AI industry.
• The investigation will kickstart with a phase 1" probe that will last 40 days. After this, it will be decided whether a phase 2" i.e. full probe is needed or not.

Microsoft's recent hiring of Mustafa Suleyman (co-founder of AI startup Inflection) and a number of other former employees who were a part of the core team have come under investigation.

The matter has been referred to Britain's Competition and Markets Authority for an initial merger investigation.

On Tuesday, the agency explained the cause behind the investigation and said that since Microsoft has hired a large portion of Inflection's staff, it's important to evaluate whether this move can be considered a merger under UK laws.

And if it's indeed a merger, they have to check whether it's hindering competition in the AI industry.

• According to the authorities, the investigation is currently at phase 1". This is a 40-working day period during which they will decide whether a full probe is needed or not.
• At the end of this period, if it is decided that a full probe is required (which we will get to know by September 11), then the investigation will enter into phase 2".

It looks like Microsoft is not too worried about the investigation. A spokesperson from the company said that it is confident that the hiring of talent promotescompetition and shouldnot be treated as a merger."

They also added that the company will cooperate with the authorities and provide them with all the information they need during the probe.

More About the Hirings

The hirings were announced by Microsoft in March. Suleyman was appointed as the executive vice president and CEO of Microsoft AI-a newly formed unit of the company that focuses on AI products.

• Karen Simonyan was another notable recruit who joined the company as the chief scientist, reporting to Suleyman.
• Jordan Hoffman also joined the company as an AI scientist and engineer and is now heading the company's AI hub in the UK.

The hirings aren't the only reasons why the authorities are probing. Just this March, Microsoft also signed a $650 million deal with Inflection that would allow it to sell Inflection's AI products through the Microsoft Azure platform.

• Microsoft is facing another investigation for its equity investment and partnership with the French AI startup Mistral.
• Recently, the White House has also been urged to look into Microsoft's $1.5 billion investment in UAE-based AI company G42. The latter allegedly has ties with Chinese authorities, which may be a threat to US national security.
• Then, there's the famous Microsoft-OpenAI partnership, where Microsoft has invested $13 billion in the AI firm. Amidst growing scrutiny over this relationship, Microsoft had to step down from an observatory role on OpenAI's Board.
• Microsoft has also had a big role to play in the reinstatement of Sam Altman on the OpenAI board after he was ousted in November last year.

The pattern is very clear here. The tech giant is heavily investing in AI firms which might suggest that it's trying to take away its top competitors and get them on its own team, essentially reducing competition. Taking this into account, it's not too surprising that the authorities are wary of Microsoft.

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