The hiring of Inflection AI staff by Microsoft is now under formal investigation by UK regulators. Most of Inflection's staff joined Microsoft's new AI division months ago. The UK's Competition and Markets Authority (CMA) is opening a phase one merger investigation into this partnership, with a deadline of September 11th to determine if it will progress to a second phase. If the investigation reaches the phase two stage, it could pose challenges to Microsoft's AI ambitions. Previously, the CMA conducted a thorough review of Microsoft's $68. 7 billion acquisition of Activision Blizzard in 2022, resulting in the company restructuring its deal and relinquishing key cloud gaming rights in the UK and other global markets.

While it is still early in the CMA's investigation into Inflection AI, the outcomes could have wide-ranging implications beyond the UK. Among the staff hires from Inflection AI, Google DeepMind cofounder Mustafa Suleyman joined Microsoft. Suleyman cofounded Inflection AI after leaving Google in 2022, and he currently serves as CEO of Microsoft AI. Regulators in the UK and EU have been increasingly scrutinizing the AI partnerships and investments made by Big Tech companies. The CMA has also expressed interest in Microsoft's Mistral AI partnership, but it determined that it did not meet the criteria for investigation under its merger rules.