The U.K.'s Competition and Markets Authority (CMA) has approved Microsoft's hiring of employees from Inflection AI, a deal valued at approximately $650 million, without further investigation.

This approval comes after the CMA concluded that the acquisition does not significantly impact competition in the enterprise AI sector.

Despite the approval, the CMA classified the arrangement as a 'relevant merger situation,' indicating that future similar agreements may face scrutiny.

In addition to the U.K. approval, the U.S. Federal Trade Commission (FTC) is also investigating Microsoft's partnership with Inflection AI.

The CMA had initially referred the hiring for investigation due to concerns about potential reductions in competition within the AI sector.

As part of the deal, Microsoft hired nearly the entire Inflection team and licensed their intellectual property, gaining access to their AI models and chatbot development.

The CMA noted that Inflection AI does not pose a strong competitive threat to Microsoft's existing chatbots, such as Copilot and ChatGPT.

Ultimately, the CMA concluded that while the hirings constituted a 'merger situation,' they did not pose a substantial threat to competition.

Concerns have been raised about large tech companies acquiring talent from AI startups without formal acquisitions, prompting scrutiny in both the U.K. and the U.S.

The CMA's investigation assessed whether Microsoft's hiring strategy could prompt competition concerns, despite not involving an outright acquisition.

The closure of this investigation may signal positive developments for big tech companies involved in AI partnerships amidst ongoing regulatory scrutiny.

CMA executive director Joel Bamford emphasized the importance of thorough investigation in determining the lack of competition concerns regarding the deal.