Microsoft has reportedly agreed to pay a hefty $650 Million to Inflection AI, days after the company hired its co-founders, Mustafa Suleyman and Karen Simonyan, along with 70 of its employees.
According to one source familiar with the agreement, Microsoft will pay $620 million to license Inflection's AI models and about $30 million to waive any legal claims pertaining to the mass hiring. An inquiry for comments was not immediately answered by Microsoft. AI Inflection opted not to respond.
(Photo: JOSEP LAGO/AFP via Getty Images) People visit the US technology company Microsoft's stand during the Mobile World Congress (MWC), the telecom industry's biggest annual gathering, in Barcelona on February 26, 2024.
The sale will make Inflection's investors whole with a moderate return on investment. Some legal and industry experts have suggested that Microsoft's Inflection deal could spark antitrust concerns with US regulators. The unusual deal was first reported by Bloomberg News and resembled an "acqui-hire"—but without an acquisition.
Inflection introduced Pi, a chatbot that was positioned as a more pleasant and dependable personal assistant than rivals, during the height of investor interest in chatbots last year.
However, Suleyman said to Bloomberg this week that Inflection could not develop a workable business plan.
Reid Hoffman, a venture capitalist and Microsoft board member, will continue to serve as a director and co-founder of Inflection as the business charts a new direction. Sean White, a board member and former Mozilla chief research and development officer, will take over as CEO.
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Microsoft and Inflection AI's Partnership
Inflection will keep its exclusive technology. As stated in a blog post on Tuesday, the company believes it is in a good position to work with businesses like Microsoft.
Also, Inflection AI has declared the inflow of $1.3 billion in finance, with newcomer NVIDIA, Microsoft, Reid Hoffman, Bill Gates, and Eric Schmidt spearheading the investment drive. With this, the total amount invested in Inflection reaches $1.525 billion.
Inflection is launching an ambitious project to build the largest AI cluster in the world, with a whopping 22,000 NVIDIA H100 Tensor Core GPUs, in partnership with CoreWeave and NVIDIA.
Microsoft's payment comes after the company recruited Mustafa Suleyman and Karen Simonyan, co-founders of the well-known AI startup Inflection AI, along with several of their team members, as part of its ongoing effort to draw in elite talent in the AI field.
Inflection AI's Prominence
The software giant wants to further enhance its AI-related services as 2024 progresses since AI is currently leading the sector. The organization is dedicated to competing with the leading AI companies by appointing professionals with relevant experience.
Established in 2022 by Reid Hoffman and Mustafa Suleyman, Inflection AI rose to fame for its efforts to create AI systems that could converse freely and offer assistance with various jobs.
With support from Microsoft, Inflection AI is shifting its emphasis to the AI studio business, focusing on developing and evaluating generative AI models for clients. The company highlights that it is putting more emphasis on developing APIs to enable artists everywhere.
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