Microsoft has agreed to pay Inflection AI $650 million, largely to license its artificial intelligence software, following its recent hiring of most of the startup’s staff. The deal, which resembles an “acqui-hire” but without an acquisition, has raised eyebrows in the industry and could potentially spark antitrust concerns.
Inflection AI is now planning to offload some of its compute capacity as it transitions to an enterprise business model. As part of the deal, Microsoft will pay $620 million to license Inflection’s AI models and around $30 million for waiving any legal rights related to the mass hiring.
Despite the changes, Inflection AI’s investors are expected to see a modest return on investment. The company, once valued at $4 billion after raising $1.3 billion last year, had struggled to find an effective business model for its bot named Pi. Now, under the leadership of new CEO Sean White, Inflection AI is charting a new course.
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