Microsoft’s recent acquisition of Inflection AI has sent shockwaves through the artificial intelligence (AI) world and also raised concerns about potential antitrust issues. The $650 million deal is predominantly for licensing Inflection’s AI software and the hiring of its co-founders and employees. The move is seen as a strategic move by Microsoft to bolster its AI capabilities. However, experts have suggested that this deal could attract attention from regulators who are closely monitoring Big Tech’s involvement in AI.
The acquisition of Inflection AI by Microsoft is particularly unique. It has been described as an “acqui-hire” since it involves hiring the talent without a traditional acquisition. This unconventional method has raised eyebrows and may draw scrutiny from antitrust regulators. Microsoft has been under increasing scrutiny for its AI investments and partnerships, and this latest deal may further attract regulatory attention.
Inflection AI, now with a significantly smaller staff, is looking to offload its excess compute capacity. This means they are seeking to sell or access computing power that can be used for tasks like training AI models. The company is reportedly seeking a partial refund from its cloud computing partner, CoreWeave, to reduce costs associated with building AI models. This shift in focus from a consumer to an enterprise business model may allow Inflection to streamline its operations and improve its financial position.
Under the terms of the deal, Microsoft will pay $620 million to license Inflection’s AI models and an additional $30 million for waiving any legal rights related to the mass hiring. This agreement will help to ensure that Inflection’s investors are compensated, although they may not see significant returns. Last year, the company was valued at $4 billion after raising $1.3 billion, but its inability to find an effective business model has hindered its growth.
Despite the challenges, Inflection AI’s investors remain optimistic. Reid Hoffman, a venture capitalist and Microsoft board member, will continue to be involved as a director and co-founder of Inflection. Additionally, Sean White, who formerly served as the chief research and development officer at Mozilla, will take on the role of CEO. In a LinkedIn post, Hoffman expressed his excitement about the future of Inflection and stated that it is a “good day for everyone involved.”
Inflection AI is determined to move forward and has stated that it is well-positioned to be an AI platform for businesses worldwide. The company believes that its expertise in training, tailoring, and improving the performance of large AI models sets it apart in the market. With Microsoft’s support and partnership, Inflection aims to carve out a successful path in the enterprise sector.
As Microsoft solidifies its position in the AI space through the acquisition of Inflection AI, it will be interesting to see how regulators respond. This deal may be a pivotal moment in the ongoing discussions surrounding antitrust concerns and the role of Big Tech in the AI landscape.
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