Microsoft did with Inflection what they were planning for OpenAI, stated as an "unusual deal"

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Key notes

  • Microsoft acquired AI startup Inflection for $650 million.
  • Inflection’s AI models will be integrated into Microsoft’s Azure cloud service.

Microsoft has agreed with Inflection in a deal valued at $650 million. The agreement has two key aspects: access to Inflection’s technology and the acquisition of a significant portion of its workforce. If you recall, Microsoft was ready to hire OpenAI entire team (almost) when Sam Altman was sacked for a couple of days last year

Inflection’s AI models, known for their advanced capabilities, will be integrated into Microsoft’s Azure cloud service. This addition is expected to expand the range of AI functionalities available to Microsoft’s consumer products. The financial details of the agreement indicate that a majority of the $650 million will be used to license this technology.

Alongside the technology acquisition, Microsoft is establishing a new consumer AI unit. This unit will be led by Inflection’s co-founders, Mustafa Suleyman and Karen Simonyan. A substantial portion of Inflection’s 70-person team will also be joining Microsoft’s new unit.

Inflection, on the other hand, has announced a strategic shift towards enterprise customers. The startup will now prioritize selling its AI models as business solutions, moving away from direct consumer product development like Pi.

This agreement could potentially attract regulatory scrutiny. Microsoft is already facing inquiries from the FTC regarding its AI investments. Experts suggest that the acquisition, with its potential to reduce competition in the AI market, might lead to further investigation by regulatory bodies.

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