"Microsoft? Never Heard of Em."
Dave Michaels and
Tom Dotan
It always felt like Microsoft was tempting fate the FTC with this one, sure enough:
The FTC is now drilling down on Microsoft’s deal with Inflection, seeking information about how and why they negotiated their partnership, according to a person familiar with the matter and records viewed by The Wall Street Journal. Civil subpoenas the commission sent recently to Microsoft and Inflection seek documents going back about two years. The agency is trying to determine whether Microsoft crafted a deal that would give it control of Inflection but also dodge FTC review of the transaction, the person said.
If the agency finds that Microsoft should have reported and sought government review of its deal with Inflection, the FTC could bring an enforcement action against Microsoft. Officials could ask a court to fine Microsoft and suspend the transaction while the FTC conducts a full-scale investigation of the deal’s impact on competition.
Details aside – which always sounded off, based on the reporting around the deal, but which we're now going to get a lot more info about with these subpoenas – the weirdest thing about the deal was how brazen it seemed. Microsoft had to know how this would look, regardless. And they were just a few months removed from the key role they played in the turmoil at their other massive bet in the space, OpenAI. It was like shooting off flare guns in a sea of "nothing to see here".
Speaking of "nothing to see here":
Inflection is continuing operations under a new management team but pivoted away from Pi, a consumer product, and toward services for corporate clients.
Ted Shelton, Inflection’s new chief operating officer, said he wasn’t aware of an FTC investigation. But Inflection wasn’t acquired by Microsoft, he said. “We are a wholly independent company,” Shelton said. “Microsoft has no investment in our company.”
This reminds me of the company with a single employee who is paid to answer the phone in a warehouse of empty desks. "Microsoft? Never heard of em."
One more thing: Legality and optics aside, I'm ultimately curious if this deal was worth it for Microsoft for other, more core reasons:
At Microsoft, Inflection co-founder Mustafa Suleyman and his former team established a new division called Microsoft AI that was tasked with developing AI products for consumers. That includes AI assistants for Bing, its search engine, and Windows.
This sounds like expensive coffee (perhaps justified by the kicker of access to 22,000 H100s?) that your main partner may not like too much...