Microsoft Corp. has agreed to pay Inflection AI $650 million, mostly to license its artificial intelligence. Software, with its move to hire most of the startup’s staff earlier this week, according to a person familiar with the transaction.
Microsoft stunned the AI world on Tuesday with an announcement that it has hired Inflection co-founders Mustafa Suleiman and Karen Simonian, as well as most of the startup’s 70 employees. The unusual deal, first reported by Bloomberg News, was similar to an “equity-hire” — but without The acquisition Some legal and industry experts have suggested Microsoft’s Inflection 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 is looking to offload some of its computing capacity, or access to computing power that can be used for tasks like training AI models, according to people familiar with the matter. , who spoke on condition of anonymity. Discuss private information. The company is seeking a partial refund from its cloud computing partner CoreWeave, one of the people said. This move could reduce the costs associated with building AI models as the inflection shifts to an enterprise rather than consumer business model.
As part of the deal, Microsoft will pay $620 million for Inflection’s AI models and licenses. About $30 million to waive any legal rights related to mass employment, according to one person. The financial terms were first reported by The Information.
Microsoft and CoreView did not immediately respond to a request for comment. Inflection AI declined to comment.
The deal would leave investors with inflection points, as Bloomberg previously reported, with a modest return on investment. However, those investors aren’t expected to immediately reap big rewards for what once appeared to be an AI rocket ship, valued at $4 billion after raising $1.3 billion last year.
As investor interest in chatbots surged last year, Inflection debuted a bot called Pi — positioned as a kind of personal assistant that was smarter and more reliable than competitors. But Solomon told Bloomberg this week that Inflection had not been able to find an efficient business model;
As the startup charts a new course, Reid Hoffman, a VC and Microsoft board member, will remain at Inflection as a director and co-founder. The new CEO will be Sean White, a board member who previously served as chief research and development officer at Mozilla.
Inflection will also retain its proprietary technology. In a blog post Tuesday, Inflection said it is well-positioned to serve companies including Microsoft. “Our success in training, tailoring and improving the performance of large AI models makes us uniquely positioned to be the go-to AI platform for businesses around the world,” it said.