Microsoft under investigation in the UK for potential merger with AI start-up | Financial Market News
Microsoft is currently under investigation in the UK over allegations of effectively merging with an artificial intelligence (AI) start-up firm by hiring its key employees. The Competition and Markets Authority (CMA) is looking into whether the hiring of Inflection AI staff, including co-founder Mustafa Suleyman, who became the head of Microsoft's new AI division, constitutes a merger that could lessen competition.
Microsoft has also entered into a "non-exclusive licensing deal" to use Inflection AI's AI models. The initial probe, known as a phase one inquiry, was launched after the CMA called for views on Microsoft's hiring of Inflection staff.
If the CMA finds enough evidence of a merger between Microsoft and Inflection that could harm competition, it will proceed to a more thorough investigation. A decision on whether the transaction should be cleared or investigated further is expected by September 11.
Inflection AI specializes in generative AI, where computers create media like text and images based on vast datasets. The hype around this technology has led to major deals between tech giants and smaller developers, such as Microsoft's backing of OpenAI and its integration of ChatGPT into Bing.
Tech firms like Google and Meta have also incorporated generative AI products into their services to capitalize on investor and consumer interest. The reliance on powerful hardware for these services has boosted companies like Nvidia to new heights of market value.
The CMA has expressed concerns over big tech's AI dominance and the potential for larger firms to control access to AI hardware and products. Chief Executive Sarah Cardell emphasized the importance of fair competition and consumer protection to ensure the full potential of AI innovation is realized and its benefits are widely shared across society.
In conclusion, the investigation into Microsoft's alleged merger with Inflection AI and the broader implications for competition in the AI market highlight the importance of regulatory oversight and fair competition practices in the tech industry. Investors and consumers should monitor developments in this case to understand how it may impact the tech sector and their own finances.