Syed Imran Haider 
Microsoft has hired former employees of Inflection, an artificial intelligence startup. It has been referred for a merger investigation in the United Kingdom.
On Tuesday, the Competition and Markets Authority of Britain, said that the hiring needs to be assessed. It is because it could be considered a merger under the UK rules.
The investigation
Microsoft had hired the co-founder of Inflection, Mustafa Suleyman, along with most of the other staff of the startup.
If it is indeed a merger, then it could result in reduced competition in the AI sector. If the CMA believes there is a need for further investigation, then it could call for an in-depth inquiry.
This would be called as ‘Phase 2’ probe. According to the CMA, if it deems a Phase 2 investigation is required, it would announce the decision by September 11th.
A spokesperson for Microsoft said that hiring talent actually promotes competition and should not be considered a merger.
According to the spokesperson, the company would share all information that the CMA needs to complete its investigation.
In March, Microsoft had announced that it had hired Suleyman and a number of other key employees from Inflection.
The hiring
Microsoft had hired the AI firm’s co-founder as its executive vice president. He would also serve as CEO of a newly formed unit named Microsoft AI.
This would focus on the company’s artificial intelligence products. This includes its AI assistant, Copilot. Microsoft had recently integrated it into its Microsoft 365 software and Windows.
The software giant also hired Karen Simonyan as the chief scientist, who would report to Suleyman. It should be noted that both of the new hires had previously worked for Google-owned DeepMind.
In its statement, the CMA did not disclose how the deal could have undermined competition.
Previously, the regulator had stated that it was also looking into the associated arrangements Microsoft had made with Inflection. This was in addition to the probe into the employee hiring.
The issues
When Microsoft had first announced that it had hired Inflection staffers, it had only revealed that it had taken on several members. It had not revealed any details about a licensing arrangement.
The regulator wants to determine if these hires from Inflection and its arrangement with Microsoft could affect competition in the AI space.
Earlier this year, the CMA had said that it was dropping another investigation into Microsoft. This was related to the partnership of the Redmond, Washington-based firm with Mistral, a French AI startup.
Previously, the watchdog had also called upon interested parties to discuss if Amazon’s deal with AI startup Anthropic could be considered a merger.
The CMA has not announced if it will begin a formal investigation into this deal. Microsoft’s investment into OpenAI has exceeded $13 billion.
Not only has Microsoft invested funds into the company, it has also used its GPT large language models to improve its own AI products. This includes its Bing search engine and Copilot AI platform.
Until last week, it had also held a nonvoting observer seat on OpenAI’s board.
