Wary of aggressive regulators, tech dealmakers are getting creative. Microsoft’s decision to hire co-founders and staff of artificial intelligence start-up Inflection is not an acquisition, according to the companies. Let’s see if Washington agrees.
On the surface, the plan appears to skirt the Hart-Scott-Rodino Antitrust Improvements Act that requires companies to report pre-merger notifications for acquisitions. In addition to hiring staff, Microsoft is reported to be paying to license Inflection AI software but the deal is not exclusive. Inflection will remain an independent business, albeit a hollowed out one. It can keep licensing its technology and can even be acquired.
The curious set up is still likely to attract regulator interest. If agencies are concerned that it will reduce competition in a potentially transformative area of technology, they can investigate.