Microsoft stunned the tech world on Tuesday when it announced that it has hired Mustafa Suleyman, the cofounder of $4 billion AI startup Inflection, to run Microsoft’s AI operations. Karén Simonyan, another Inflection cofounder, is also joining Microsoft, along with an unspecified number of staffers. Essentially, the cloud giant, worth $3.12 trillion, has nabbed one of the most coveted teams of AI experts at a pivotal time in the evolution of the buzzy technology. But the deal—if that’s what this arrangement can be called—is highly unusual. Inflection, having recently secured a staggering $1.3 billion in funding just last year, has ranked among the most high-profile (or hyped, depending on your perspective) startups in the new crop of AI companies. As part of the deal, the company said it was shifting away from the consumer version of its Pi chatbot, launched less than one year ago. And, according to Forbes, Microsoft is not taking an equity stake in Inflection AI, and no intellectual property is changing hands. To call this turn of events a head scratcher is an understatement. There’s a lot to unpack here, from potential conflicts with Microsoft’s stake in OpenAI to Inflection cofounder Reid Hoffman sitting on Microsoft’s board of directors. Could this be the pin that pops the AI bubble, or is the technology bound to be run by a select, well-funded few that can afford the compute—that is, until the U.S. Justice Department and the Federal Trade Commission get involved? Here are some of the key questions raised and items to watch following Microsoft and Inflection’s most unusual announcement. The proverbial elephant in the room here is that Big Tech companies like Microsoft are under intense antitrust scrutiny right now. In January, the FTC said it was launching an inquiry into Microsoft’s $13 billion partnership with OpenAI, the company behind ChatGPT (the FTC also said it was looking at investments between Amazon and Anthropic and Google and Anthropic).

Full story : How Microsoft’s $4 billion deal with Inflection AI is a non-acquisition but still an acquisition.