HomeMarket NewsMicrosoft Navigates $650M Inflection AI Tech Acquisition Without Owning

Microsoft Navigates $650M Inflection AI Tech Acquisition Without Owning

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Microsoft Makes Strategic Move

Microsoft Corporationย 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 Inflectionโ€™s personnel which includes the startupโ€™s co-founders, namely Mustafa Suleyman and Karรฉn 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 โ€œacqui-hireโ€ 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. Microsoftโ€™s latest strategy of absorbing Inflectionโ€™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 companyโ€™s early investors, who had once envisioned a meteoric rise akin to an AI โ€œrocket shipโ€ valued at $4 billion, are now poised to realize only a modest return on their investment.

Disclaimer:ย This content was partially produced with the help ofย Benzinga Neuroย and was reviewed and published by Benzinga editors.

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