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Microsoft Cleared of Antitrust Concerns by UK Watchdog Over Inflection AI Ties

By  |  September 4, 2024

In a recent decision, UK antitrust authorities determined that Microsoft’s recruitment of former Inflection AI employees and its partnership with the startup does not pose a threat to market competition, marking a significant win for the tech giant amid heightened regulatory scrutiny on both sides of the Atlantic.

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    According to the Wall Street Journal, the UK’s Competition and Markets Authority (CMA) launched an inquiry in July to assess whether Microsoft’s relationship with Inflection AI could be classified as a de facto merger, potentially limiting competition within the country. After a thorough review, the CMA has concluded that no formal investigation is necessary, finding no evidence that the partnership could harm competitive dynamics.

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    Earlier this year, Microsoft made headlines by hiring Inflection AI’s co-founder along with nearly the entire workforce of the startup. Additionally, Microsoft agreed to pay approximately $650 million as part of a licensing fee to resell Inflection AI’s technology. This move is part of a broader trend among major tech companies investing heavily in AI startups, seeking to secure advanced AI capabilities that could yield significant returns in the future.

    Read more: Microsoft’s Efforts to Comply with EU Antitrust Rules May Require More Steps

    “We are pleased that after an investigation and review of the facts, the CMA has concluded that our hiring of Inflection employees raises no competition concerns,” a Microsoft spokesperson stated, emphasizing the company’s commitment to maintaining a fair competitive landscape.

    The CMA’s decision offers a reprieve for Microsoft as it continues to navigate regulatory challenges both in the U.K. and the U.S. British authorities are still examining Microsoft’s partnership with OpenAI, the company behind ChatGPT, to determine if it should be viewed as a de facto merger. Meanwhile, in the U.S., the Federal Trade Commission (FTC) is also scrutinizing Microsoft’s deal with Inflection AI. As reported by the Wall Street Journal in June, the FTC is investigating whether Microsoft structured the agreement to bypass a government antitrust review.

    This ruling comes as part of a broader global focus on the activities of major technology companies, with regulators increasingly concerned about their influence and potential to stifle competition in various sectors. For Microsoft, the CMA’s decision represents a crucial step in defending its business practices amidst ongoing scrutiny.

    Source: The Wall Street Journal