US probes Microsoft’s deal with AI firm Inflection
The Federal Trade Commission is now seeking information about how they negotiated the partnership
US REGULATORS are investigating whether a deal Microsoft struck with AI startup Inflection may have been structured to avoid scrutiny, the Wall Street Journal reported, citing a person familiar with the matter.
Microsoft in March agreed to pay the startup US$650 million to license its AI software, after the US company moved to hire much of Inflection’s staff. The Federal Trade Commission is now seeking information about how they negotiated that partnership, the Journal reported. The unusual deal resembled an “acqui-hire” – where big companies take over startups mostly for their employees – but without an acquisition. Legal and industry experts at the time suggested Microsoft’s Inflection deal may trigger regulatory concerns.
The news coincides with heightened scrutiny over the players in artificial intelligence, a technology with the potential to transform economies and industries. The Justice Department has said it will step up its focus on competition in the AI sector, as Big Tech ploughs billions of dollars into developing ChatGPT-like services.
Representatives for Microsoft, Inflection and the FTC weren’t immediately available for comment after normal hours.
The Biden administration’s antitrust agencies are already pursuing cases against some of the world’s largest technology companies, including Alphabet’s Google, Amazon.com and Meta Platforms. Going forward, the Justice Department and the FTC have agreed to divvy up responsibilities for investigating Nvidia, OpenAI and Microsoft, the New York Times reported separately.
Among other things, watchdog agencies are scrutinising the dependency of the most popular AI startups on established tech companies for financing and infrastructure.
Microsoft has invested more than US$13 billion in ChatGPT-maker OpenAI. The drama around the ouster and reinstatement of OpenAI chief executive officer Sam Altman in November unearthed how closely knit Microsoft and the company have become.
The relationship has drawn scrutiny from antitrust authorities in the UK and the European Union. In January, the FTC said it was looking into Microsoft’s investment, along with others made by Amazon and Alphabet. BLOOMBERG
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