Nearly all the recent probes by the UK’s competition watchdog into ‘sweetheart deals’ between big tech firms and AI startups have been shelved. What happened?
March 19th was a good day for Inflection – but perhaps a better one for Microsoft. That day it was revealed that Redmond had agreed to pay £495m to license and host the enterprise AI startup’s powerful large language model (LLM), a deal that would not only repay Inflection’s investors but also, the startup claimed, help to “put cutting-edge AI capabilities in the hands of thousands of developers.”
Meanwhile, 72 members of Inflection itself – including its two co-founders, Mustafa Suleyman and Karén Simonyan – would find themselves newly employed in Microsoft’s new AI division. A statement from Redmond’s chief executive Satya Nadella was positively euphoric. “There is no franchise value in our industry,” said Nadella. “Let us use this opportunity to build world-class AI products, like Copilot, that are loved by end-users!”
Despite the strangely Marxist phrasing, the underlying message was aggressively capitalist: a big tech whale had effectively swallowed the resources and talent of a smaller, nimbler contemporary. Such partnerships are viewed with intense suspicion by the UK’s Competition and Markets Authority (CMA). In a speech delivered to competition experts in Washington back in April, its chief executive Sarah Cardwell said that the watchdog had identified an “interconnected web” of 90 such deals involving the same six firms: Google, Apple, Microsoft, Meta, Amazon and Nvidia.
“We believe it is important to act now to ensure that a small number of firms with unprecedented market power don’t end up in a position to control not just how the most powerful models are designed and built,” said Cardwell, “but also how they are embedded and used across all parts of our economy and our lives.”
Probes by the CMA were subsequently launched into deals between Microsoft and the startups Inflection, Mistral and Open AI and two separate arrangements struck by Google and Amazon with Anthropic. And yet, despite its chief executive’s thunderous invective against the power of big tech over AI, the CMA repeatedly came up short in its merger investigations. In five out of six of its probes, the watchdog found that the deal under scrutiny did not, in fact, ‘qualify for investigation under the merger provisions of the Enterprise Act 2002.’
Heidi Vella 