Microsoft pays more than half a billion dollars to recruit AI talent

Microsoft stunned the tech world this week when it announced it had hired most of the 70 employees of startup Inflection AI, including co-founders Mustafa Suleyman and Karen Simonyan. The unusual deal resembled a “buy-to-hire” deal, but no sale actually occurred. Some legal and industry experts said the deal could still raise antitrust concerns with U.S. regulators, who are increasingly scrutinizing Big Tech’s AI investments and partnerships.

Now, with a much smaller staff, Inflection AI is trying to offload some of the computing power or access to computing power used for tasks like training AI models, according to the people.BloombergThe company is looking to cloud partners like CoreWeave for a portion of the money back, a move that could reduce the costs associated with building AI models as Inflection transitions to an enterprise model rather than a consumer business.

As part of the deal, Microsoft will pay $620 million for the rights to use Inflection's AI models and about $30 million to avoid liability related to mass hiring.

According toReutersThe Inflection AI team will move to Microsoft and work for a new AI division created by Microsoft called Microsoft AI. The software company is looking to strengthen and expand its AI services for consumer products. Suleyman will be the CEO of the division, while Simonyan will be the chief scientist.

Inflection AI emerged as one of the brightest names in the field of generative AI after raising $1.3 billion from Microsoft and Nvidia in June 2023. It has built its own platform model and operates the Pi chatbot with more than 1 million daily active users.

Inflection AI's new CEO will be Sean White, who was previously the director of R&D at Mozilla. Inflection AI will also retain its proprietary technology and serve other companies, including Microsoft.