Microsoft faces UK antitrust investigation over hiring of Inflection AI team

UK regulators are now formally investigating Microsoft’s hiring of Inflection AI employees, months after most of Inflection’s employees joined Microsoft’s new AI division. The UK Competition and Markets Authority (CMA) is now opening a phase one merger partnership investigation, with a deadline of September 11 to determine whether the investigation will advance to a second phase.

If the case progresses to phase two, it could pose a hurdle to Microsoft’s AI ambitions. The CMA last signaled a further review of Microsoft’s $68.7 billion acquisition of Activision Blizzard in 2022, eventually forcing the company to restructure its business and give up key cloud gaming rights in the UK and many other markets around the world. It’s still early days for the CMA’s Inflection AI investigation, but the results could have an impact far beyond the UK.

Regulators in the UK and EU have been increasingly paying attention to the AI ​​partnerships and investments that Big Tech is making. The CMA also flagged interest in Microsoft’s Mistral AI partnership, but ruled it did not qualify for investigation under its merger rules.

Microsoft was also recently accused of EU antitrust violations for bundling its Teams app with Office 365 and Microsoft 365 subscriptions. If Microsoft is found guilty of EU antitrust violations, the company could face a fine of up to 10% of the volume of company’s annual business worldwide. Microsoft also recently reached an agreement with a cloud industry group in Europe to avoid a potential antitrust battle.