UK Regulator Determines Microsoft's Investment in Mistral AI Not a Merger

The UK Competition and Markets Authority (CMA) recently concluded that Microsoft's financial investment into the artificial intelligence company, Mistral AI, does not meet the criteria of a merger. This decision follows an initial period where the CMA sought opinions from the industry regarding the specifics of the partnership between the two companies.

Clarification of the Partnership

Announced in a concise statement, the CMA made it clear that it 'decided that Microsoft Corporation's partnership with Mistral AI does not qualify for investigation under the merger provisions of the Enterprise Act 2002.' This resolves the questions raised in late April when the regulator pondered whether Microsoft’s $16.4 million stake in the French AI firm was, in fact, a merger. The stake acquisition had raised concerns about its potential impact on competition within the industry.

Background of the Investigation

At the initial stages of their review, the CMA invited commentary from those with an interest in the matter. Another focus of their examination was Microsoft's recruitment of Mustafa Suleyman, co-founder and CEO of Inflection AI, who joined Microsoft as the head of its AI division, bringing many of his team members from Inflection AI to Microsoft. Microsoft is believed to have compensated Inflection AI an estimated $650 million, though the CMA did not address this during their recent announcement. Previously, the European Commission had also investigated, and similarly found that the move did not constitute a merger.

Further Deals Under Scrutiny

Beyond Microsoft's activities, the CMA is also scrutinizing Amazon’s multi-billion-dollar investment in Anthropic, another AI startup. Their agreement includes Anthropic buying AWS cloud resources and an exclusive deal to host its AI models on Amazon's Bedrock platform.

Expert Alex Haffner from the UK law firm Fladgate commented on the CMA's ruling on Mistral AI, noting that while the Mistral decision has been made, the status of deals with Inflection AI and Anthropic, as well as Microsoft’s cooperation with Open AI, remain unresolved. Haffner's commentary underscores the keen interest of competition authorities in the partnerships forming between large tech companies and smaller AI firms.

Anticipating Further Developments

The industry can expect more updates from the CMA regarding the ongoing investigations and other arrangements in the artificial intelligence industry, as these partnerships continue to evolve and shape the competitive landscape.

regulation, Microsoft, AI