Microsoft Makes Strategic Move
Microsoft Corporation MSFT has reportedly decided on a hefty $650 million payment to Inflection AI. This large sum is intended primarily for the licensing of its artificial intelligence software.
Acqui-hire, Not Acquisition
What Happened: The deal struck between Microsoft and Inflection AI includes a staggering $620 million allocated for licensing its AI models, with an additional $30 million to waive any legal ties associated with mass hiring, sources connected to the deal informed Bloomberg.
Churning the Antitrust Waters
Remarkably, Microsoft recently assimilated a considerable portion of Inflection’s personnel which includes the startup’s co-founders, namely Mustafa Suleyman and Karén Simonyan, as well as most of its 70 employees. This major talent influx has spurred concerns among U.S. regulators about potential antitrust ramifications.
Strategic Maneuvering
This particular transaction draws striking parallels to an “acqui-hire” mechanism, albeit absent an official acquisition. Inflection AI, now significantly leaner in workforce, is actively seeking to divest some of its computing resources. Moreover, as it transitions towards an enterprise-focused business model, the company is reportedly aiming to reclaim part of its cloud computing overheads from its partner, CoreWeave.
Investing in AI
Why It Matters: Playing to its strength, this move from Microsoft follows a substantial investment in AI. Back in June 2023, Microsoft, along with Nvidia Corp, had collectively injected $1.3 billion into Inflection AI. Microsoft’s latest strategy of absorbing Inflection’s brain trust and AI assets could be construed as a prescient maneuver to diversify its AI portfolio while offsetting potential risks linked to industry bigwig OpenAI.
Although initially promising, Inflection has grappled with establishing a viable business model. As per reports, the company’s early investors, who had once envisioned a meteoric rise akin to an AI “rocket ship” valued at $4 billion, are now poised to realize only a modest return on their investment.
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
