UK's Competition Authority To Probe Microsoft' partnership with AI Startup

The Competition and Markets Authority (CMA) has initiated a comprehensive investigation into the collaboration between tech giant Microsoft and AI startup Inflection.

At the start of 2022, Mustafa Suleyman – founder of Infraction who departed from Google to establish his new venture two months later – was recruited by Microsoft's AI initiative team along with several colleagues. Simultaneously, a partnership agreement between Microsoft and Inflection was established for access to its artificial intelligence technologies.

Initially, regulators questioned this partnership as it potentially sidestepped the typical scrutiny of an outright acquisition. The UK regulator subsequently declared in April that they were examining whether such a partnership constitutes a relevant merger and initiated a comment period spanning three months. Now equipped with sufficient evidence, the CMA is proceeding to launch a full investigation, anticipating a conclusion on the next stage by September 11th.

A Microsoft representative expressed confidence that their recruitment of talent fosters competition and should not be perceived as merger activity. The company has assured the UK Competition and Markets Authority that it will provide any necessary information for them to conduct thorough inquiries promptly.

EU antitrust chief, Margrethe Vestager, had previously remarked: "We have noted this development and also acknowledge its attempt to circumvent our typical review processes."

This investigation by the CMA aligns with wider concerns regarding competition within the AI field. Another joint venture between Microsoft and French-based AI company Mistral was concurrently under examination by the same authority, although this particular inquiry later concluded without action from the CMA. Additionally, a partnership involving Amazon and artificial intelligence lab Anthropic is also being scrutinized for potential merger implications by the regulatory body.

Anthropic's agreement with Amazon includes using Amazon Web Services as its main cloud provider while Amazon holds a $4bn stake in the company, which develops the Claude LLM technology. In 2019, OpenAI secured substantial backing from Microsoft, partly through credits for their cloud computing service. More recently, Microsoft relinquinated its observer position on OpenAI's board and will now participate in regular stakeholder meetings alongside Apple, which had planned to occupy a similar role.