CMA clears Microsoft acquisition of Inflection AI assets

The Competition and Markets Authority (CMA) has approved Microsoft's acquisition of key personnel and intellectual property from Inflection AI, it announced on Wednesday, determining that the deal does not significantly impact competition in the artificial intelligence (AI) market.

Microsoft’s acquisition, announced in March, involved hiring most of Inflection AI's team, including its co-founders, Mustafa Suleyman and Karén Simonyan.

The deal also included licensing arrangements related to Inflection’s intellectual property.

The CMA reviewed the transaction to assess its potential impact on competition, particularly in the development of foundation models (FMs) and consumer chatbots.

It said in its decision that while the acquisition qualified as a merger under UK law, it did not raise substantial competition concerns.

Inflection AI, a developer of the chatbot Pi, had a small market presence, and its products were not seen as material competitors to Microsoft's chatbot offerings, such as Copilot and ChatGPT.

The CMA found that Inflection's technology, while focused on emotional intelligence, did not significantly constrain Microsoft's dominance or other competitors in the field.

It also concluded that the acquisition would not harm competition in the enterprise-focused FM sector.

Inflection’s AI studio business, which had been in the early stages of development, was not seen as a competitive threat to Microsoft or other established FM developers.

As a result, the CMA decided not to refer the merger for further investigation, clearing the way for the transaction to proceed.

Reporting by Josh White for Sharecast.com.