The Federal Trade Commission has announced its investigation against Microsoft and Inflection AI's deal due to antitrust concerns, which saw most of the latter firm's staff hired by the tech giant, as reported by Mint.
In March, Microsoft acquired Inflection AI's co-founder and nearly all of its workers, and the company agreed to pay the business around $650 million as part of a licensing fee to market its technology. Investors in Inflection were assured that they would be reimbursed over time with sales profits.
The commission recently issued civil subpoenas to Microsoft and Inflection for documents dating back about two years. According to the individual, the commission is investigating whether Microsoft negotiated a deal that would give it ownership of Inflection while avoiding an FTC examination of the transaction.
Companies must report purchases for more than $119 million to federal antitrust enforcement authorities, who can assess the deal's impact on competition.
Suppose an inquiry reveals that a merger or other investment will significantly diminish competition or result in a monopoly. In that case, the FTC or the Justice Department, which share antitrust power, can sue to halt the transaction.
Officials might request that a court punish Microsoft and delay the transaction while the FTC launches a full-scale inquiry into the deal's impact on competition.
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FTC on Tech Deals
The FTC has already begun investigating AI investments made by major corporations such as Microsoft and Alphabet, which owns Google.
FTC Chair Lina Khan is concerned that tech behemoths may eventually purchase or dominate the most successful AI applications, giving them a firm hold on systems with humanlike skills to talk, produce art, and write computer code.
According to a person familiar with the case and papers reviewed by sources, the FTC is now looking into Microsoft's contract with Inflection to learn how and why they arranged their relationship.
Investigations on Microsoft
The investigation follows just a month after British competition regulators announced plans to review recent AI partnerships involving Microsoft due to concerns that they might hinder AI competition.
The Competition and Markets Authority (CMA) said at the time that it would examine Microsoft's partnership with French business Mistral AI and its employment of key employees from Inflection AI.
The growing public and corporate interest in AI technology has prompted big tech companies to invest heavily in generative AI firms. However, antitrust investigators are looking into these transactions. The CMA said it would engage with interested third parties before commencing a comprehensive antitrust investigation.
Microsoft agreed to comply with the CMA, claiming that talent acquisition and fractional investments in AI businesses promote competition and are not mergers.
Microsoft hired Mustafa Suleyman of Inflection, a co-founder of Google's DeepMind AI unit, to oversee its consumer AI department in March. MS collaborated with Mistral earlier this year after working with OpenAI, the creator of ChatGPT, which is also under CMA inspection.
Mistral has vowed to cooperate with the CMA throughout the investigation to retain its independence and market access.
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