Britain’s competition regulator approved Microsoft’s hiring of former Inflection AI staff and cooperation with the startup, concluding that the transaction did not require additional scrutiny.
The Competition and Markets Authority launched an investigation in July to see whether the merger would raise competition problems in the country, as both businesses develop and supply consumer chatbots.
The antitrust authority said that, while the acquisition could be regarded as a “relevant merger situation,” it “does not give rise to a realistic prospect of a substantial lessening of competition.”
Mustafa Suleyman joined Microsoft from Inflection in March, along with several other senior personnel. Suleyman was named Microsoft’s senior vice president and CEO of Microsoft AI.
The newly formed Microsoft unit focused on its artificial intelligence technologies, notably Copilot, the company’s AI assistant, which was integrated into Windows and Microsoft 365.
“Inflection AI is not a strong competitor to the consumer chatbots that Microsoft has developed directly (Copilot) and in partnership with OpenAI (ChatGPT). On this basis, we cleared the transaction,” Joel Bamford, executive director of mergers at the CMA, wrote in a LinkedIn post.
The investigation revealed that the transfer of employees and other arrangements made Microsoft and Inflection indistinguishable, qualifying as a merger under UK law. However, the CMA found no evidence of competition concerns requiring a Phase 2 review.
Given that any technology in this space can quickly become obsolete without ongoing development, the CMA notes the importance of expertise in the development and supply of FMs and chatbots.
“Based on the evidence seen by the CMA, the team of staff responsible for development is therefore at the core of any business seeking to develop FMs or chatbots. In this context, the CMA considers that acquiring a team with relevant know-how – even without further assets – may fall within the CMA’s merger control jurisdiction,” the CMA stated in the summary of its decision.
In its decision summary, the CMA acknowledged the need to continue to create foundational AI models (FMs).
We earlier reported that Hewlett Packard Enterprise (HPE) is anticipated to get the go-ahead from European regulators for its $14 billion acquisition of Juniper Networks, a significant transaction that will bolster its networking division.
The acquisition was revealed in January, and HPE filed with the European Commission earlier this month to request regulatory permission.
