Microsoft Spared EU Antitrust Probe Over Inflection AI Ties

By Mauro Orru

European Union antitrust officials said a number of countries in the bloc had withdrawn requests for regulators to probe Microsoft's ties to Inflection AI, meaning the tech giant won't face a formal investigation over its partnership with the artificial-intelligence startup.

Microsoft earlier this year hired Inflection AI's cofounder and almost all of its employees and agreed to pay the startup around $650 million as part of a licensing fee to resell its technology. Big tech firms have been splurging on AI startups to get their hands on what they see as promising AI features that they hope to cash in on further down the line.

The European Commission, the EU's executive arm, said seven member states had pulled their initial referral requests after the European Court of Justice, the bloc's highest court, rebuked the commission for overreach in Illumina's takeover of Grail. The ECJ said two weeks ago that the legal tool that officials relied on to look at the case was used improperly.

"We welcome that referrals of our hiring of Inflection AI employees to the European Commission were withdrawn," a Microsoft spokesperson said. "We continue to be confident that the hiring of talent promotes  competition and should  not be treated as a merger." Inflection AI didn't respond to a request for comment.

The commission said it had taken note of the withdrawals. "Therefore, the commission will take no decision in this matter," it said.

The announcement comes two weeks after U.K. antitrust officials said Microsoft's partnership with Inflection AI didn't pose a threat to competition and wouldn't open a formal investigation.

The decisions offer Microsoft some breathing space as the tech giant faces more scrutiny on both sides of the Atlantic. British officials are still looking at whether Microsoft's partnership with ChatGPT maker OpenAI should be considered a de facto merger. Meanwhile, The Wall Street Journal reported in June that the Federal Trade Commission was investigating whether Microsoft structured its deal with Inflection AI in a manner to avoid a government antitrust review.

News Corp, owner of Dow Jones Newswires and the Journal, has a content-licensing partnership with OpenAI.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

September 18, 2024 12:48 ET (16:48 GMT)

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