On July 16, the UK Competition and Markets Authority announced that it has launched a formal investigation into Microsoft (NASDAQ: MSFT) for its hiring of former Inflection AI employees and cooperation with the company.

Over the past 18 months, global regulatory bodies have increasingly scrutinized potential anti-competitive practices in the artificial intelligence sector. Microsoft's multiple transactions with several small startups have triggered heightened review.

In March of this year, Microsoft hired Mustafa Suleyman, co-founder of DeepMind under Google (NASDAQ: GOOGL), to lead its newly established AI division. They also hired several employees from Inflection, a company founded by Suleyman in 2022.

Reports indicate that Microsoft agreed to pay approximately $650 million to Inflection as part of the agreement, acquiring Inflection's AI algorithms and allowing the company to compensate its investors, including former Google CEO Eric Schmidt and Bill Gates.

Regarding the UK Competition and Markets Authority's investigation, a Microsoft spokesperson told Reuters that hiring talent promotes competition and should not be seen as a merger. "We will provide all necessary information to the UK Competition and Markets Authority to expedite the investigation."

The Competition and Markets Authority will decide by September 11 whether to recommend further investigation into this transaction.

Previously, Microsoft faced scrutiny for its collaborations with leading AI startups such as OpenAI and France's Mistral AI.

Last week, Microsoft relinquished its board observer seat at OpenAI to alleviate concerns from US and UK antitrust regulators about its level of control in the AI business.

The Competition and Markets Authority has also sought feedback on the relationship between Amazon (NASDAQ: AMZN) and Anthropic.