Microsoft's Inflection Acquihire Is Too Small To Matter, Say UK Regulators

The UK's Competition and Markets Authority (CMA) has cleared Microsoft's acquisition of Inflection AI, stating that the startup is not large enough to affect competition in the enterprise AI space. The CMA concluded that the deal met the criteria for a relevant merger situation due to the size and market share of the companies involved. However, the CMA found that Inflection had a very small share of UK domain visits for chatbots and conversational AI tools and was unable to increase or sustain its user numbers. Competitors did not view Inflection's capabilities as a significant competitive constraint, and the CMA determined that the acquisition would not lead to a substantial lessening of competition. The CMA also found that Inflection's foundational model offering would not exert any material competitive constraint on Microsoft or other enterprise foundational model suppliers. The investigation was initiated in July, and the CMA's decision was published in a summary document. Microsoft's new AI division will be led by Inflection co-founders Mustafa Suleyman and Karen Simonyan, along with other Inflection employees. The CMA's decision allows Microsoft to proceed with its plans to integrate Inflection AI into its operations.