© Reuters. Microsoft Could Buy Inflection AI’s Tech And Brains For $650M Without Actually Buying Them
Benzinga – by Ananya Gairola, Benzinga Staff Writer.
Microsoft Corporation (NASDAQ:MSFT) has reportedly agreed to pay Inflection AI $650 million, largely to pay for licensing its artificial intelligence software.
What Happened: Microsoft’s deal with Inflection AI includes a $620 million payment for licensing its AI models and an additional $30 million to waive any legal rights related to the mass hiring, reported Bloomberg, citing people familiar with the matter.
This comes after Microsoft hired a significant portion of Inflection’s staff.
The Satya Nadella-led tech giant’s onboarding of Inflection’s co-founders, Mustafa Suleyman and Karén Simonyan, along with most of the startup’s 70 employees, has raised concerns about potential antitrust issues with U.S. regulators.
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The deal is being likened to an “acqui-hire” without an official acquisition.
Inflection, now with a significantly reduced staff, is looking to offload some of its computing capacity. The company is reportedly seeking a partial refund from its cloud computing partner, CoreWeave, as it shifts to an enterprise business model.
Why It Matters: This deal comes after Microsoft’s significant investment in AI. In June 2023, Microsoft, along with Nvidia Corp, invested $1.3 billion in Inflection AI.
Microsoft’s hiring of Inflection’s co-founders and staff and licensing of its AI software could be seen as a strategic move to diversify its AI portfolio and mitigate potential risks related to ChatGPT-parent OpenAI.
Despite the initial promise, Inflection has faced challenges finding an effective business model. The report noted that the company’s investors, who once saw it as an AI “rocket ship” valued at $4 billion, are now expected to see a modest return on their investment.
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