LONDON- Microsoft The hiring of certain former employees of AI startup Inflection has been subject to a merger investigation within the UK.
The UK Competition and Markets Authority said on Tuesday that the hiring of Inflection co-founder Mustafa Suleyman and a lot of the startup's staff would must be reviewed to find out whether it constituted a merger under UK law and will due to this fact result in less competition within the AI sector.
If the CMA finds grounds for further investigation, it will probably move the case forward to an in-depth investigation, often called a “Phase 2” investigation. The CMA said it could announce a choice on whether to maneuver the case forward to a Phase 2 investigation by September 11.
A Microsoft spokesman told CNBC on Tuesday that they “believe that attracting talent promotes competition and should not be treated as a merger.”
The spokesman added that the corporate would offer the CMA with all the knowledge it requires to finish its investigation.
Microsoft announced in March that it had poached Suleyman from Inflection, together with plenty of other key company employees.
Suleyman was named executive vp and CEO of Microsoft AI, a newly formed unit of the corporate that focuses on artificial intelligence products, including Copilot, the corporate's AI assistant that has been integrated into Windows and Microsoft 365 software.
In addition to appointing Suleyman as a senior manager, the Redmond, Washington-based technology giant named Karen Simonyan as the corporate's chief scientist. She will report back to Suleyman.
Both Suleyman and Simonyan were former employees of DeepMind, Google's own AI laboratory.
Although the CMA didn’t explain in its statement on Tuesday how the deal could potentially harm competition, the regulator had previously said it was examining Microsoft's “entry into related agreements with Inflection” along with hiring staff.
Reports from Reuters and the Wall Street Journal suggest that Microsoft paid $650 million in royalties to Inflection to resell Inflection's AI models via the Azure cloud platform.
Microsoft, alternatively, has not Disclose details of a license agreement with Inflection when it announced latest hires, only to search out that it was acquiring “several members” of the corporate’s 70-person team.
The regulator wants to search out out whether this, along with certain latest hires at Inflection, has led to a merger that might ultimately result in a “significant reduction in competition” within the AI field.
Earlier this 12 months, the CMA announced that it was closing a separate investigation into Microsoft's involvement and partnership with French AI startup Mistral.
The regulator had previously invited interested parties to comment on whether a separate deal Amazon The collaboration with Anthropic, a number one AI startup, represents a merger.
The CMA has not yet indicated whether it can begin a proper review of this agreement.
Microsoft has invested greater than $13 billion in OpenAI. In addition to financially supporting the corporate, Microsoft also uses OpenAI's GPT large language models to further develop its own AI products, including the Copilot AI platform and the Bing search engine.
And until last week, Microsoft held a non-voting observer seat on OpenAI's board, but that has reportedly been a cause for concern for regulators investigating the deal on antitrust grounds.
Amazon has invested $4 billion in Anthropic and offers the corporate's Claude core models on Amazon Bedrock, the corporate's own managed AI service.
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