CMA looks deeper into Microsoft’s AI hirings

The Competition and Markets Authority (CMA) has begun an initial investigation of Microsoft's latest attempt to build out its artificial intelligence (AI ) strategy.

In March, Microsoft CEO Satya Nadella announced the company had hired Inflection AI’s co-founders Mustafa Suleyman and Karén Simonyan, with Simonyan also being the startup’s chief scientist. 

At the time, Nadella described Simonyan as “a renowned AI researcher and thought leader”, who has been responsible for the development of AI breakthroughs including AlphaZero developed by DeepMind.

Inflection AI also received a funding boost of $625m from the tech giant in what is believed to be a non-exclusive deal to licence Infusion’s AI model. Inflection said version 2.5 of its AI model would be hosted on the Microsoft Azure cloud.

The CMA has now begun an initial investigation into the hirings and the relationship between Microsoft and Inflection. The initial investigation is due to complete on 11 September. After this, the CMA will take a decision on whether to proceed with a phase two investigation.

This is the latest in a series of investigations the CMA has begun, looking at the influence of the tech giants in the UK’s AI sector.

In April, the CMA opened up an invitation for comments from interested third parties to give their views on whether the partnerships between Microsoft and Mistral AI, and Amazon and Anthropic, as well as Microsoft’s hiring of former employees and related arrangements with Inflection AI, fall within UK merger rules.

The CMA’s executive director of mergers, Joel Bamford, said: “Foundation models have the potential to fundamentally impact the way we all live and work, including products and services across so many UK sectors – healthcare, energy, transport, finance and more.

“So open, fair, and effective competition in foundation model markets is critical to making sure the full benefits of this transformation are realised by people and businesses in the UK, as well as our wider economy where technology has a huge role to play in growth and productivity.”

Bamford said the CMA would assess, objectively and impartially, whether each of the Microsoft and Amazon deals fall within UK merger rules and whether they have any impact on competition in the UK.

What the CMA’s latest investigation highlights is Microsoft’s appetite to go after the top talent in AI as it continues to pivot to an AI-focused organisation. In 2023, it invested $10bn in OpenAI, to gain access to the company’s AI models. Among the big benefits to Microsoft that came out of this investment is that OpenAI is hosted on the Microsoft Azure cloud. Microsoft hosts the OpenAI models, which means applications developers have to use the Azure OpenAI application programming interface (API) to access the models.

While the arrangement with Inflection AI is believed to be non-exclusive, Inflection is planning to offer an API for Azure developers, which is something the CMA is highly likely to be looking into as it investigates Microsoft.