Microsoft Faces UK Antitrust Probe Over Inflection AI Team Hiring

Microsoft is under regulatory scrutiny in the U.K. following its hiring of the core team from Inflection AI, a U.S.-based rival to OpenAI in which Microsoft had previously invested. The Competition and Markets Authority (CMA) announced a “phase 1” merger inquiry today, initiating a 40-working day investigation to gather evidence and determine whether to proceed with a full probe.

This development follows the launch of Microsoft’s new consumer AI division by CEO Satya Nadella, led by Inflection AI founders, including Karén Simonyan and Mustafa Suleyman, along with several other Inflection AI members. Notably, Jordan Hoffmann, now heading Microsoft’s U.K. AI hub in London, is among those who joined.

The probe centers on concerns that big tech companies are using new M&A approaches, dubbed “quasi-mergers,” to avoid regulatory scrutiny in the AI sector. These strategies may include strategic investments or hiring startup founders and technical talent.

This announcement was anticipated as the CMA had been conducting preliminary inquiries into several AI partnerships, including Microsoft’s investment in Mistral AI, which was found not to qualify for investigation under current regulations.

The CMA is also examining Amazon’s $4 billion investment in U.S.-based AI company Anthropic and is expected to investigate Microsoft’s partnership with OpenAI.

The phase 1 inquiry will determine by September 11 whether the hiring constitutes a “merger” and if it potentially harms competition in the U.K. If so, a more detailed “phase 2” probe, lasting around six months, will follow.