Microsoft hiring Inflection team triggers interest from EU's antitrust chief

All sorts of levers being pulled to lure AI developers from here, there, everywhere

Amid the scramble to hire developer talent in the field of AI, regulators in the European Union are expressing interest in recent events that saw Microsoft lift and shift most of the team at Inflection.

Microsoft formed an AI division last month headed by Mustafa Suleyman and Karén Simonyan, founders of Inflection. It reportedly paid the Palo Alto based startup $650 million in a move that saw scores of the team transfer to Microsoft, along with giving Redmond the right to use Inflection's models.

Competition officials within the EU are already closely inspecting Microsoft’s investment in OpenAI, believed to be in the region of $13 billion, and are checking to ascertain if this runs afoul of the region's merger rules. Also under the magnifying glass is Microsoft's $15 million stake in Mistral.

Margrethe Vestager, executive veep for the European Commission and head honcho of the antitrust team, this week said the exchange between Microsoft and Inflection was not a merger and so "not caught by merger rules."

"We might (look into it)," she told reporters including Reuters, "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."

The trigger for an official investigation would be more similarly shaped agreements between major tech corporations and AI startups.

"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.

A spokesperson for the EU told us: "We are following closely the developments in this sector, but I am afraid we would not comment any further at this stage."

Microsoft refused to comment.

Google and AWS have also become significant AI venture capitalists. In 2023, the Chocolate Factory stumped up a reported $2 billion for Anthropic, including $500 million upfront and $1.5 billion to come over time. Since September, Amazon has pumped $4 billion into Anthropic, developer of the Claude family of models.

Amazon is also dangling $500k in cloud credits to attract AI startups, as outlined this week. The thought process is to get in early to build links with fledgling businesses that may become customers long term, and might even create tech that Amazon wants first refusal on.

The industry's gone mad since OpenAI rolled out a demo of ChatGPT in November 2022 – share prices are now built on the potential of AI, and it seems like a bubble that will burst at some point, unless shareholders start to see returns on the investments being made in the sector.

Microsoft is still trying to convince customers that Copilot is worth the money, and Dell said last month it is also running proof of concepts for generative AI.

Arthur Lewis, President of the Core Business Operations for Dell’s Global Infrastructure Solutions biz, used a baseball analogy to describe the stage it is at with many customers.

"When it comes to the enterprise, we're in the car pulling up into the stadium, and the teams are still trying to figure out the rules of the game," he told attendees at Morgan Stanley’s Technology, Media and Telecoms conference.

"So folks are crossing Ts and dotting Is and running a lot of PoCs (proof of concepts) against a myriad of different use cases to really understand where the productivity benefits," he added.

Such is the call for AI talent that Elon Musk said Wednesday he is giving his AI engineering team a raise, "contingent on progress milestones" to deter defections to rivals.

Musk claimed OpenAI is "aggressively recruiting Tesla engineers with massive compensation offers and have unfortunately been successful in a few cases."

According to The Information, Tesla's head of vision has quit Tesla to join xAI, after Musk convinced him to stick within his corporate camp instead of switching to OpenAI.

Musk added on X: "The talent war for AI is the craziest talent war I've seen!" ®

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