FTC opens antitrust probe of Microsoft AI deal

The Federal Trade Commission is investigating whether Microsoft structured one of its latest deals with an artificial-intelligence startup to avoid a government antitrust review of the transaction. Microsoft in March hired Inflection AI’s co-founder and almost all of its employees and agreed to pay the startup around $650 million as part of a licensing fee to resell its technology. The agency is trying to determine whether Microsoft crafted a deal that would give it control of Inflection but also dodge FTC review of the transaction, the person said. Officials could ask a court to fine Microsoft and suspend the transaction while the FTC conducts a full-scale investigation of the deal’s impact on competition. Tech companies often buy startups to scoop up their talent, a tactic known as an “acquihire.” In Microsoft’s case, the company picked off Inflection’s specialized workforce of AI researchers but didn’t purchase the company outright.