The UK's Competition and Markets Authority (CMA) has formally investigated this partnership and set 11 September as the deadline for the initial phase of a merger inquiry.

The CMA aims to determine whether this arrangement could significantly harm competition in any UK market for goods or services. If it qualifies as a merger under the Enterprise Act 2002, things could get interesting.

Inflection AI’s Mustafa Suleyman now leads Microsoft's new AI initiatives alongside other key startup hires. But this move has left remaining Inflection employees and potential recruits feeling jittery, affecting the startup's ability to attract fresh talent.

If the investigation progresses to the second phase, Microsoft might lose strategic minds and face regulatory hurdles in its AI ambitions.

Across the pond, the US Federal Trade Commission (FTC) is also scrutinising this deal. It is concerned that Vole engineered this arrangement to sidestep antitrust scrutiny. Typically, transactions valued over $119 million require reporting to antitrust agencies. The FTC wants to know if tech giants are monopolising crucial AI technologies.

Microsoft and Inflection AI have even received subpoenas, digging into their partnership negotiations over the past two years.