Is Microsoft's Talent Poaching Of Inflection Staff Inviting EU Antitrust Scrutiny? Margrethe Vestager Warns: 'If Things Become A Trend...'

The EU’s antitrust chief, Margrethe Vestager, has stated that they have noted Microsoft Corporation’s MSFT talent acquisition of Inflection AI staff, including its co-founders.

What Happened: On Wednesday, Vestager expressed concerns about Microsoft’s recent hiring of the majority of the staff from Inflection, an artificial intelligence startup, including its co-founders, indicating that if other companies adopt this trend, it could potentially trigger antitrust action, reported Reuters.

“It is the kind of thing on which we keep an eye but as you say, since it is not a merger it is not caught by merger rules,” she told reporters.

“We might (look into it) but we have no decisions, neither to do something or not do something. We have registered that this is happening and also registering that it’s happening in a way so that it escapes our scrutiny from our usual boxes.”

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Last month, Microsoft hired Inflection AI co-founders Mustafa Suleyman and Karen Simonyan, along with most of the startup’s 70-strong team, for its newly established Microsoft AI unit. This talent and technology transfer allowed Microsoft to bypass the regulatory scrutiny typically associated with traditional acquisitions.

Vestager acknowledged the development but stated that it does not fall under the purview of merger rules. However, she said that if this trend continues and undermines competition preservation measures, such as merger rules, it could lead to corrective action.

“Of course if things become a trend and if that trend seems to be something that circumvents what has been put in place to preserve competition, which is merger rules, of course that could be restored and eventually corrected,” Vestager said.

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Why It Matters: In January earlier this year, the EU also scrutinized Microsoft’s $13 billion investment in ChatGPT-parent OpenAI for potential anti-competitive practices.

At the time, it was reported that the EU had been monitoring this investment for potential anti-competitive practices, which could have led to a full investigation under the bloc’s merger rules.

The relationship between Microsoft and OpenAI was also under scrutiny by the European Commission and the EU’s competition authority.

Soon after OpenAI CEO Sam Altman was fired on Nov. 17 last year (he was re-hired later), Microsoft CEO Satya Nadella told journalist Kara Swisher that he had not been consulted regarding the decision and that “there would be no OpenAI without Microsoft.”

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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