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Microsoft is under investigation by the Federal Trade Commission over its deal with Inflection AI. The Wall Street JournalIn March, the company hired nearly all of Inflection AI’s employees, including founder Karen Simonyan and Mustafa Suleiman, who is also a co-founder of DeepMind. Microsoft also paid the company $650 million to license its artificial intelligence technology. Now, the FTC is trying to investigate whether the two companies knowingly crafted the deal to avoid antitrust scrutiny.
As journal According to Microsoft, companies must report acquisitions worth more than $119 million to federal antitrust authorities. The Federal Trade Commission or the Department of Justice investigate whether the deal harms competition in an industry and can bring lawsuits to block mergers or investments deemed anticompetitive. When a company wants to hire all the top talent from another company, it typically buys the other company in a “hire by acquisition” deal. But Microsoft did not buy Inflexion. Inflexion denied that larger companies had any power over it. The company’s new COO, Ted Shelton, told the magazine that it still operates as an independent company under new leadership.
The FTC has already subpoenaed both Microsoft and Inflexion, seeking relevant documents from the past two years. If the FTC determines that the companies made the deal in a way that gave Microsoft control over the other while avoiding regulatory scrutiny, it could fine Microsoft and halt the deal pending a more thorough investigation.
Microsoft issued the following statement to Engadget: “Our agreement with Inflection provides us with the opportunity to hire talent and build a team at Inflection AI that can accelerate Microsoft Copilot, while allowing Inflection to continue to pursue its independent business and ambitions as an AI studio. We take our legal transaction reporting obligations under the HSR Act seriously and are confident that we are in compliance with those obligations.”
U.S. federal agencies have been cracking down on monopoly practices by the world’s largest technology companies for the past few years. To more efficiently conduct antitrust investigations into the current largest players in artificial intelligence, the agencies recently A contract was signed As for how responsibility will be divided: The Department of Justice will lead the investigation into NVIDIA, while the FTC will handle the antitrust investigation into Microsoft and OpenAI.
Update, June 6, 2024 at 11:46am ET: This story has been updated to add a statement from Microsoft.
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