Microsoft's deal with Inflection AI

Extracted Attributes

• Deal Type

  Licensing agreement and acquihire of staff

• Waiver Fee

  $33 million

• Licensing Fee

  $620 million

• Microsoft's New Unit

  Microsoft AI (Consumer AI unit)

• UK Regulatory Outcome

  Cleared by Competition and Markets Authority (CMA)

• Inflection AI Structure

  Public benefit corporation

• Inflection AI Headquarters

  Palo Alto, California, USA

• Inflection AI Founding Date

  2022

• Total Deal Value (estimated)

  Over $1 billion

Timeline

• Inflection AI, Inc. was founded. (Source: wikipedia)

  2022

• Inflection AI announced it had raised $1.3 billion to develop more personal AI systems, with Microsoft as a major investor. (Source: web_search_results)

  2023-06

• Microsoft hired Inflection AI's co-founders, Mustafa Suleyman and Karén Simonyan, to lead its new AI division, along with most of Inflection AI's employees. (Source: web_search_results)

  2024-03

• Reuters reported that Microsoft agreed to pay Inflection AI about $650 million in cash as part of a deal to use Inflection's models and hire most of its staff. (Source: web_search_results)

  2024-03-21

• Britain's Competition and Markets Authority (CMA) cleared Microsoft's partnership with Inflection AI, stating it did not require a deeper investigation. (Source: web_search_results)

  2024-09-04

Inflection AI

Inflection AI, Inc. is an American technology company which has developed machine learning and generative artificial intelligence hardware and apps, founded in 2022. The company is structured as a public benefit corporation and is headquartered in Palo Alto, California.

Web Search Results

• Microsoft pays Inflection $650 mln in licensing deal while ... - Reuters

  - Microsoft (MSFT.O), opens new tab has agreed to pay AI startup Inflection about $650 million in cash in an unusual deal that would allow Microsoft to use Inflection's models and hire most of the startup's staff including its co-founders, a person familiar with the matter told Reuters on Thursday. [...] Microsoft hired Inflection co-founders Mustafa Suleyman and Karen Simonyan on Tuesday, along with most of the 70-person team at the AI firm, for a newly created consumer AI unit called Microsoft AI. The leading software company has been looking to consolidate and expand its AI offerings for consumer products. [...] Experts said the deal could draw more regulatory scrutiny on Microsoft, which already faces inquiries from the U.S. Federal Trade Commission on its AI investment. "This deal could be seen as an effort to reduce competition in the foundation model markets, as Infection is going to be a shell of its former self," said Steven Weber, professor at the UC Berkeley School of Information, who has received research funding from technology firms including Google and Microsoft.

• UK clears Microsoft's partnership with Inflection AI - Reuters

  Reuters reported that Microsoft had agreed to pay about $650 million as part of the deal, which gave it access to Inflection's AI models and enabled the startup to reimburse its investors, who include former Bill Gates and Google CEO Eric Schmidt. Reporting by Radhika Anilkumar in Bengaluru; Editing by Mrigank Dhaniwala and Savio D'Souza Our Standards: The Thomson Reuters Trust Principles., opens new tab [...] Published Time: 2024-09-04T11:37:36.927Z UK clears Microsoft's partnership with Inflection AI | Reuters =============== Skip to main content Exclusive news, data and analytics for financial market professionals Learn more about Refinitiv - Britain's competition regulator, on Wednesday, cleared Microsoft's (MSFT.O), opens new tab hiring of some former staff of Inflection AI and its partnership with the startup and said the deal did not required a deeper investigation. [...] The CMA said that even before being bought, Inflection had a small portion of UK visits for chatbots and AI tools and, unlike its rivals, couldn't significantly grow or maintain its chatbot users. In March, Microsoft hired Mustafa Suleyman, co-founder of Google (GOOGL.O), opens new tab DeepMind, as head of its newly-created AI unit. It also hired a number of employees from Inflection, which he set up in 2022.

• Microsoft's Inflection AI Deal Gets Green Light from UK Regulator

  In June 2023, Inflection AI announced it had raised $1.3 billion to develop more personal AI systems, with Microsoft as a major investor. Earlier in the year, Microsoft hired Inflection AI’s co-founders, Mustafa Suleyman and Karén Simonyan, to lead its new AI division. Microsoft also absorbed Inflection AI, including its Pi assistant, and hired most of its employees to compete with Apple and Google in the AI market. This move raised significant concerns among customers about privacy and data [...] In its findings, the CMA mentioned that Microsoft hired almost all of the Inflection AI team and entered into a series of commercial agreements. Those agreements included a nonexclusive licensing deal to use Inflection’s intellectual property (IP) for Microsoft’s Azure cloud. A potential merger could lead to substantial lessening of competition. [...] The UK’s Competition and Markets Authority (CMA) has cleared Microsoft’s acquisition of Inflection AI employees. While Microsoft absorbed the team and IP from Inflection AI, the CMA found that the startup’s limited market share and impact on competitors were not significant enough to raise concerns. The decision highlights that future mergers or acquihires involving AI talent and intellectual property may still be scrutinized under competition laws.

• Microsoft's Inflection AI grab cost more than $1 billion, says insider

  advertisement After the model licensing fee, the waiver fee, and the executive and employee compensation is tallied, Microsoft’s deal with Inflection is likely worth more than $1 billion, says a source with direct knowledge of the deal, who spoke on condition of anonymity because the terms of the deal have not been made public. [...] When Microsoft announced last week that it had hired two of the three founders of Inflection AI, as well as most of the startup’s employees, little was known about the deal except that it also contained guarantees for the startup’s investors, and that the tech giant also bought the rights to sell access to Inflection’s most powerful model. Now more details are starting to come to light. [...] Microsoft paid Inflection AI $620 million for the nonexclusive right to sell access to the Inflection AI model through its Azure Cloud over a multiyear period, the companies confirm. Microsoft paid an additional $33 million for a waver from claims against it related to hiring Inflection employees. But, according to an internal document shared with Fast Company, that was only one aspect of the agreement.

• Inflection AI takes slice of chatbot revolution, accelerates ... - Microsoft

  On the technology front, Inflection AI is confident that using Azure AI infrastructure has better positioned the company to lead in the years ahead. With its dependable and stable infrastructure, the company has considerably sped up development time and increased the efficacy of its AI. As Suleyman notes, “It’s been very valuable to us to work with Microsoft as we enhance and expand Pi because the reliability and scale of Azure AI infrastructure is among the best in the world.” [...] Inflection AI’s largest language models use Azure AI infrastructure and thousands of AI-optimized virtual machines continuously trained for several months, which Microsoft supports at scale. “Microsoft has been a great help to us with Azure AI infrastructure and was one of the first to scale NVIDIA Tensor Core A100 GPUs and daisy chain them together,” remarks Suleyman. “We’ve found Microsoft’s service to be reliable, stable, and offer good uptime, which is exactly what we need as AI [...] Pi is a cloud-native project, and Inflection AI turned to Microsoft early on to help build the technology stack that keeps it running and constantly evolving. “One of the challenges in developing Pi is that we still require vast amounts of computational resources to train the language models,” says Suleyman. He cites Microsoft as having pioneered builds of NVIDIA Quantum-2 InfiniBand networking infrastructure, which drives superfast connections between GPUs and can accelerate training of the