Microsoft's Inflection Acquihire Is Too Small To Matter, Say UK Regulators (theregister.com) 3
The Register's Brandon Vigliarolo reports: Microsoft's "acquihire" of Inflection AI was today cleared by UK authorities on the grounds that the startup isn't big enough for its absorption by Microsoft to affect competition in the enterprise AI space. The Competition and Markets Authority (CMA) confirmed the conclusion of its investigation by publishing a summary of its decision. While the CMA found that Microsoft's recruitment of Inflection co-founders Mustafa Suleyman and Karen Simonyan, along with other Inflection employees, in March 2024 to lead Microsoft's new AI division did create a relevant merger situation, a bit of digging indicated everything was above board.
As we explained when the CMA kicked off its investigation in July, the agency's definition of relevant merger situations includes instances where two or more enterprises have ceased to be distinct, and when the deal either exceeds 70 million pounds or 25 percent of the national supply of a good or service. In both cases, the CMA determined [PDF], the Microsoft/Inflection deal met the criteria. As to whether the matter could lead to a substantial lessening of competition, that's where the CMA decided everything was OK.
"Prior to the transaction, Inflection had a very small share of UK domain visits for chatbots and conversational AI tools and ... had not been able to materially increase or sustain its chatbot user numbers," the CMA said. "Competitors did not regard Inflection's capabilities with regard to EQ [emotional intelligence, which was an Inflection selling point] or other product innovation as a material competitive constraint." In addition, the CMA said Inflection's foundational model offering wouldn't exert any "material competitive constraint" on Microsoft or other enterprise foundational model suppliers as none of the potential Inflection customers the CMA spoke with during its probe identified any features that made Inflection's software more attractive than other brands. Ouch.
As we explained when the CMA kicked off its investigation in July, the agency's definition of relevant merger situations includes instances where two or more enterprises have ceased to be distinct, and when the deal either exceeds 70 million pounds or 25 percent of the national supply of a good or service. In both cases, the CMA determined [PDF], the Microsoft/Inflection deal met the criteria. As to whether the matter could lead to a substantial lessening of competition, that's where the CMA decided everything was OK.
"Prior to the transaction, Inflection had a very small share of UK domain visits for chatbots and conversational AI tools and ... had not been able to materially increase or sustain its chatbot user numbers," the CMA said. "Competitors did not regard Inflection's capabilities with regard to EQ [emotional intelligence, which was an Inflection selling point] or other product innovation as a material competitive constraint." In addition, the CMA said Inflection's foundational model offering wouldn't exert any "material competitive constraint" on Microsoft or other enterprise foundational model suppliers as none of the potential Inflection customers the CMA spoke with during its probe identified any features that made Inflection's software more attractive than other brands. Ouch.
Well, duh. Acquisitions can't change the buyer... (Score:2)
270+ acquisitions over 30 years and the products keep getting less effective for users, less secure and more expensive. They have socially engineered a space where things can only get worse. Why would Microsoft swal
Story wins lack of interest prize of the day (Score:2)
But I confess I couldn't find anything that interested me in the summary.
So it will probably turn out to be a sleeper that will explode in our faces next year?