Microsoft to Pay $650 Million Settlement After Hiring Majority of Inflection AI Staff

Microsoft and Inflection AI have agreed to a $650 million settlement to license the startup's intelligence software and compensate for the movement of the majority of its staff.

Earlier this week, Microsoft appointed Inflection AI's co-founders Mustafa Suleyman and Karen Simonyan as part of its newly established AI unit.

Microsoft Hires Majority of Inflection AI Staff

Aside from the co-founders, Microsoft also hired most of the startup's 70 employees. According to a person familiar with the transaction, Microsoft has agreed to pay $620 million for the licensing of AI models while the $30 million will be used to waive any legal rights related to the mass hiring.

Some legal and industry experts are looking between the deal of the companies due to its resemblance to an "acqui-hire" or hiring with an acquisition. Some have suggested that this could spark antitrust concerns, especially with the U.S. regulators who are now actively scrutinizing movements of big tech partnerships.

Inflection AI Moves Forward With Changes

In a blog post, Inflection AI welcomed its new CEO, Sean White, who has a decade of experience in the technology and research field. Meanwhile, third co-founder Reid Hoffman will continue his duty on the board.

"Our plan going forward is to lean into our AI studio business, where custom generative AI models are crafted, tested, and fine-tuned for commercial customers," the company announced.

Moreover, the company also shared that it will now host Inflection 2.5 on Microsoft Azure which will help in reaching creators in a wider spectrum. As of writing the API is not yet available, but the company shared that it will be opened soon.

Inflection AI is now reportedly trying to reduce some of its computing capacity and is seeking a partial refund from its cloud computing partner CoWeave to help reduce the costs of building AI models.