The Federal Trade Commission is probing Microsoft’s recent deal with artificial intelligence startup Inflection AI to examine if the tech giant deliberately structured it in a manner that would avoid an antitrust review, the Wall Street Journal reported, the latest in a series of regulatory efforts to scrutinize big tech’s dominance over AI.
Microsoft's deal with Inflection is the latest AI-related transaction to receive scrutiny from ... [+]
In March, Inflection AI’s co-founder and CEO Mustafa Suleyman joined Microsoft along with nearly all 70 of the startup’s employees in a move that shook up the company, which was valued last year at $4 billion.
The hirings were part of a deal where Microsoft agreed to pay Inflection $650 million, allowing the Windows maker to license the startup’s AI models.
Under the deal, however, Microsoft did not gain any equity in Inflection or acquire any of the startup’s intellectual property—eliminating the need for it to be reported to federal regulators for antitrust oversight.
Citing an unnamed source familiar with the matter, the Journal reported the FTC has sought details about “how and why” the deal was negotiated and has sent subpoenas to both Microsoft and Inflection seeking documents up to two years old.
The regulator is investigating if Microsoft engineered the deal in a manner that allowed it to take control of Inflection without having to deal with an FTC review, the report adds.
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If the review finds Microsoft needed to seek a review of the deal, the FTC could ask a court to issue a fine against Microsoft and block the deal until a full review of its impact on competition is completed.