European Commission Rules Against Merger Analysis Of Inflection Staff hiring By Microsoft

European Commission Rules Against Merger Analysis Of Inflection Staff hiring By Microsoft

The company had hired Mustafa Suleyman, Karen Simonyan and a 70-strong team for a newly-created unit

The European Commission has stated that Microsoft's hiring of staff from Al startup Inflection, including its co-founders, will not be scrutinized under European Union merger rules. It added that seven EU countries had withdrawn their requests for examination.

The move follows the recent ruling of the Court of Justice of the European Union (CJEU), limiting the EU's ability to review mergers below certain revenue thresholds.

The judges said the EU antitrust watchdog was also not allowed to encourage its national peers to ask it to take up such cases.

While the Commission said such deals could be killer acquisitions in which big companies acquire startups to shut them down, critics felt that the merger powers were regulatory over-reach.

The EU executive stated, "The seven member states that submitted an initial referral have decided to withdraw their requests. Therefore, the Commission will not decide on the matter.”

However, it added that the deal amounted to a merger, as it meant the 'new Inflection' would shift its focus to a different activity, namely its AI studio business.

Referring to the bloc’s merger, it said, "The Commission regards the agreements entered between Microsoft and Inflection as a structural change in the market that amounts to a concentration as defined under Article 3 of the European Union Merger Regulation (EUMR).”

Welcoming the announcement, a spokesperson for Microsoft remarked, "We are confident that hiring talent promotes competition and should not be treated as a merger.”

In March, the company hired co-founders Mustafa Suleyman, Karen Simonyan and most of Inflection's 70-strong team for a newly-created unit called Microsoft Al. It was to consolidate and expand its AI offerings for consumer products.