Microsoft faces UK antitrust investigation over Inflection AI staff hiring

UK regulators are currently conducting a formal investigation into Microsoft’s employment of Inflection AI employees, months after most of Inflection’s staff joined Microsoft’s new AI division. The UK Competition and Markets Authority (CMA) is currently opening the first phase of its investigation into the merger partnership, with a September 11 deadline to determine whether the investigation will move to the second phase.

If the case proceeds to phase two, it could be a setback for Microsoft’s AI ambitions. The CMA recently flagged a more in-depth review of Microsoft’s $68.7 billion acquisition of Activision Blizzard in 2022, which ultimately forced the company to restructure its deal and give up key cloud gaming rights in the UK and many other markets around the world. It’s still early days in the CMA’s investigation into Inflection AI, but the findings could have implications far beyond the UK.

Regulators in the UK and EU are increasingly scrutinising Big Tech’s AI partnerships and investments. The CMA also expressed interest in Microsoft’s Mistral AI partnership but ruled it did not qualify for investigation under merger rules.

Microsoft was recently accused of violating EU antitrust laws for bundling its Teams app with Office 365 and Microsoft 365 subscriptions. If Microsoft is found guilty of violating EU antitrust laws, the company could be fined up to 10 percent of its annual worldwide turnover. Microsoft also recently reached a settlement with a cloud industry group in Europe to avoid a potential antitrust battle.