Microsoft Snatches Inflection AI's Core Team for $650M

March 23, 2024 Update: As per a recent report from The Information, Microsoft has reached an agreement to integrate Inflection AI's models into its Azure cloud services, with a licensing fee totaling around $650 million. However, Microsoft aims to clarify that its previous recruitment of key members from Inflection AI should not be construed as an acquisition.

Microsoft CEO Satya Nadella announced on March 19 that Mustafa Suleyman and Karen Simonyan, co-founders of Inflection, will be joining Microsoft to lead the newly established "Microsoft AI" division, focusing on advancing Copilot and other consumer-facing AI products and research. Concurrently, Inflection AI announced plans to develop customized generative AI models for business clients, emphasizing testing and refinement.

Insiders, as reported by Reuters on March 22, anticipate Inflection AI will utilize the licensing proceeds to provide returns to investors such as Greylock and Dragoneer, projecting a 1.5x return on investment.

Steven Weber, a professor at the University of California, Berkeley School of Information, noted that this transaction might be interpreted as an effort to mitigate competition in the base model market, considering that Inflection AI's core team joining Microsoft could render it an entity devoid of substance.

Additionally, Business Insider highlighted that Inflection AI, valued at $4 billion last year, successfully raised over $1 billion in funding with support from notable investors including Bill Gates, Eric Schmidt, and Nvidia.