FTC investigating Microsoft deal with Inflection AI- WSJ

Investing.com– The Federal Trade Commission is investigating whether Microsoft structured a recent deal with artificial intelligence startup Inflection to avoid antitrust scrutiny from the government, The Wall Street Journal reported on Wednesday. 

Microsoft Corporation (NASDAQ:) had in March hired Inflection co-founders Mustafa Suleyman and Karén Simonyan, along with a bulk of the startup’s employees to lead in-house AI development in the tech giant, including the development of products such as Copilot. 

Microsoft had also agreed to pay Inflection $650 million as part of a licensing agreement with the startup, granting it access to its flagship AI models, which are now available on the Azure marketplace. 

Inflection emerged as one of the hottest names in the rapidly growing AI space over the past year, raising over $1.3 billion in a funding round led by Microsoft and NVIDIA Corporation (NASDAQ:). It had developed a chatbot called Pi to compete with OpenAI’s ChatGPT.

After the Microsoft deal, Inflection, under a new CEO, said it will pursue developing AI models for enterprise applications.

The Microsoft deal had garnered some controversy over its nature, with critics calling out the tech giant for essentially poaching most of Inflection’s talent.

The company was already facing scrutiny from the FTC over its other activities in AI, specifically its relationship with OpenAI.