Microsoft’s hiring of Inflection AI staff faces competition inquiry

The UK’s competition watchdog has launched an investigation into Microsoft’s hiring of senior figures from start-up Inflection AI, having previously raised concerns about close partnerships between firms in the sector.

The Competition and Markets Authority (CMA) said it was looking into Microsoft’s hiring of former Inflection staff, as well as “entry into associated arrangements” by Microsoft with the AI firm as part of a merger inquiry.

Earlier this year, Microsoft announced the creation of a new team, Microsoft AI, which will be led by British AI pioneer Mustafa Suleyman , who was the head of start-up Inflection AI, having previously founded DeepMind , the AI firm now owned by Google.

A number of other Inflection staff have followed Mr Suleyman to Microsoft.

Since then, the CMA has published a report raising concerns about the potential risks to open, fair and effective competition in the AI market.

The report specifically identified what it called an “interconnected web” of more than 90 partnerships and strategic investments between a small handful of the biggest tech and AI firms, a set-up it warned could be used to consolidate power and resources within the sector.

The competition watchdog then asked for views from interested parties on the partnerships, including those between Microsoft and Mistral AI, Amazon and Anthropic, and Microsoft’s links to Inflection.

Amazon has invested around four billion dollars (£3.2 billion) in Anthropic as it looks to gain an advantage in the AI race, while Microsoft announced a multi-year partnership with French AI start-up Mistral earlier this year, which is reported to include investment of around £13 million.

Microsoft is also the biggest investor in ChatGPT maker OpenAI, while Apple has signed into partnership with OpenAI to embed ChatGPT into future versions of the iPhone as part of its Apple Intelligence scheme to bring more generative AI tools to its products.

The CMA now has until September 11 to complete its initial investigation and make on decision on whether a more in-depth investigation is needed.

Microsoft has been contacted for comment.