Microsoft is currently under a regulatory probe in the United Kingdom after hiring the core team from Inflection AI, a U.S.-based OpenAI competitor in which Microsoft had previously invested.
The Competition and Markets Authority (CMA) has announced the initiation of a “phase 1” merger inquiry, marking the beginning of a 40-working day investigation period to gather evidence and determine if a full probe is warranted.
This development follows the launch of a new consumer AI division by Microsoft CEO Satya Nadella, led by the founders of Inflection AI, including deep learning scientist Karén Simonyan and Google DeepMind co-founder Mustafa Suleyman. Several Inflection AI members have joined Microsoft’s AI unit, with Jordan Hoffmann now heading Microsoft’s U.K. AI hub in London.
The growing concerns center around big tech companies utilizing a new M&A strategy to sidestep AI regulatory scrutiny, termed the “quasi-merger,” involving various approaches from strategic investments to recruiting startup founders and technical talent.
Multi-pronged investigations
The CMA’s recent announcement comes as no surprise, following preliminary enquiries in April into AI partnerships, including Microsoft’s investment in Mistral AI and Amazon’s investment in U.S.-based AI company Anthropic. The CMA is also expected to delve into Microsoft’s partnership with OpenAI, akin to the European Commission’s scrutiny in the EU.
With the phase 1 inquiry underway, the CMA must reach a decision by September 11 on whether the hiring constitutes a “merger” and if it poses any competition issues in the U.K. If so, a more thorough “phase 2” probe could follow, lasting approximately six months.
