UK clears Microsoft's deal with Inflection, AI investments still face regulatory pressure
Microsoft's investment in Inflection AI has received approval from the UK antitrust regulator, avoiding a deeper review. The Competition and Markets Authority (CMA) in the UK stated that although this collaboration is considered a merger, it will not significantly reduce competition. CMA has expressed concerns about large tech companies investing in AI startups and emphasized that similar transactions will be scrutinized. Microsoft will pay $650 million for this investment and has already hired key employees from Inflection
According to the Zhītōng Finance and Economics APP, Microsoft (MSFT.US) avoided a thorough investigation by the UK antitrust regulator by investing in Inflection AI. The Competition and Markets Authority (CMA) of the UK stated on Wednesday that although this collaboration was classified as a merger, it would not significantly reduce competition in the industry.
Before approving this transaction, the agency reviewed several investment plans of large tech companies in AI startups. These investigations highlighted concerns about Silicon Valley companies controlling and shaping future markets through investments.
Joel Bamford, Director of Mergers at CMA, stated, "For consumer chatbots developed directly by Microsoft and Copilot, as well as in collaboration with OpenAI, Inflection AI is not a strong competitor."
CMA has the authority to consider this arrangement as a "transfer of assets or employees - which can be seen as a merger, where the transfer includes not only assets or employees, but also enables specific business activities to continue."
Although the collaboration has been approved, CMA's decision sends a signal to all companies that it is concerned about the increasingly serious issue of tech giants providing funding to recruit employees from startups. The agency has now made it clear that it has the authority to review such transactions and summon companies for investigation when necessary.
A Microsoft spokesperson expressed satisfaction with CMA's decision.
In March of this year, Microsoft agreed to pay $650 million to Inflection, mainly for licensing its AI software, as well as for hiring most of the employees of this startup.
Before announcing this transaction, Microsoft hired Inflection's co-founders Mustafa Suleyman and Karén Simonyan, as well as most of the employees of the startup.
The UK's CMA is leading the way globally in regulating the investment frenzy of large tech companies in AI startups. The agency's research earlier this year found that Silicon Valley companies could use these investments to further consolidate their market power.
Since then, CMA has begun investigating Microsoft's investment in OpenAI and its partnership with Mistral AI. Amazon (AMZN.US) and Google (GOOG.US, GOOGL.US) investments in the AI startup Anthropic are also closely monitored