Microsoft’s Inflection deal is under investigation

The FTC is investigating whether Microsoft channeled Mr. Deeds’ butler and structured a deal with Inflection, an AI startup, to avoid a government antitrust review of the transaction, according to a new Wall Street Journal report (very sneaky sir).

The deal in question happened in March, when Microsoft hired Inflection’s cofounder and almost all of the company’s employees and agreed to pay the startup $650 million as part of a licensing fee to resell its technology.

• Companies are required to report acquisitions of more than $119 million to federal antitrust-enforcement agencies, which have the option to investigate a deal’s impact on competition.
• Simply speaking, the FTC is now investigating whether Microsoft purposely acquired Inflection without actually acquiring them (which would need to be reported).

In AI, funny business and conflicts of interest seemingly abound. A report broke earlier this week that Tesla CEO Elon Musk diverted a $500 million shipment of AI chips meant for the publicly traded automaker to X and xAI, both of which he privately owns. And OpenAI CEO Sam Altman has made investments in a growing number of startups that do business with OpenAI itself, putting himself on both sides of deals.

👀 Looking ahead… Last month, the DOJ revealed that it’s closely monitoring the AI industry for potential conflicts of interest stemming from the widespread presence of shared board members between AI competitors.