The European Commission will stop looking into whether Microsoft’s hiring of Inflection AI staff breached EU merger rules after seven EU countries dropped their requests for an investigation, the EU executive said in a press release on Wednesday (18 September).
In March, Microsoft announced that it had hired two co-founders of Inflection AI, a generative AI startup, and reportedly offered jobs to most of Inflection’s staff. The Commission said such changes would have altered Inflection AI’s business model and led to “a structural change in the market that mounts to a concentration.”
The Commission concluded in July that the agreement between the two companies met specific criteria to be referred to the EU executive for an investigation, even though it did not meet the monetary limit that triggered a competition review, the press release said.
At the time, the Commission also invited member states to submit reviews of how such activities would significantly affect competition so that it could consider a wider probe, and seven countries did so.
In September, however, the European Court of Justice (ECJ) ruled that the Commission cannot request or accept member states’ referrals if mergers fall below transaction value thresholds in its decision on DNA sequencing heavyweight Illumina’s acquisition of cancer detection firm Grail – a ruling critics saw as a blow to the Commission’s ability to investigate “killer acquisitions.”
Following the ruling, member states decided to withdraw their referrals in the Microsoft-Inflection case, thus ending the Commission’s probe.
It remains unclear whether the Commission will continue to scrutinise Microsoft for hiring Inflection AI staff, a practice that Competition Commissioner Margrethe Vestager dubbed “acqui-hires” in June.
In a similar move, the UK’s Competition Markets Authority also closed its probe into the Microsoft-Inflection dealings in early September.
[Edited by Daniel Eck]