The US FTC is investigating Microsoft's deal with AI startup Inflection

According to the latest information from the Zhitong Finance and Economics APP, the US Federal Trade Commission (FTC) is investigating an agreement between Microsoft (MSFT.US) and the artificial intelligence startup Inflection to determine whether the agreement is aimed at evading regulatory scrutiny.

In March of this year, Microsoft hired Mustafa Suleyman, co-founder of Inflection AI, and almost all of its employees, promising to pay $650 million to the startup as part of a licensing fee to resell its technology. Sources also indicated that Inflection's investors were informed that they would receive returns over time through the proceeds from sales.

Microsoft has stated that Suleyman and Inflection's co-founder and chief scientist Karén Simonyan will join the tech giant to establish a new organization called Microsoft AI, focusing on advancing Copilot and other consumer AI products and research. Suleyman will lead Microsoft's AI chatbot product Copilot.

An insider mentioned that the FTC is currently seeking information on how and why the two parties reached the cooperation agreement.

The Federal Trade Commission recently issued civil subpoenas to Microsoft and Inflection, requesting documents from two years ago. Reports indicate that the agency is trying to determine whether Microsoft arranged a deal that would allow it to control Inflection while avoiding FTC scrutiny.

Sources also mentioned that if the Federal Trade Commission determines that Microsoft should report and seek government review of the deal, the agency may take enforcement action against Microsoft.

The FTC is seeking information on how the two parties negotiated the partnership. This unusual transaction is similar to an "acqui-hire," where a large company acquires a target company mainly to obtain its employees, but without an actual acquisition. Legal and industry experts at the time pointed out that Microsoft's deal with Inflection could raise regulatory issues.

Inflection has developed a large language model (LLM) and launched an AI chatbot named Pi using this technology. Currently, Inflection continues to operate under new management, shifting from the consumer product Pi to providing services for enterprise clients.

Ted Shelton, the new Chief Operating Officer of Inflection, stated that the startup is a completely independent company, and Microsoft has not made any investments in the company.

Microsoft has invested in several AI startups, including OpenAI, the creator of ChatGPT, which has received investments of billions of dollars. This alliance has faced potential scrutiny in the US and the EU Microsoft has also invested in and collaborated with the French startup Mistral AI. Antitrust authorities in the UK and the US have stated that this transaction does not require investigation. However, the EU antitrust agency plans to analyze this collaboration.

This investigation comes at a time when competition in the field of artificial intelligence is becoming increasingly fierce, with AI having the potential to change the economic and industry landscape. The US Department of Justice has stated that as tech giants invest billions of dollars in developing services similar to ChatGPT, they will pay more attention to competition issues in the field of artificial intelligence.

The US Department of Justice and the Federal Trade Commission have reached an agreement to launch antitrust investigations into the dominant positions of NVIDIA, OpenAI, and Microsoft in the field of artificial intelligence