SEATTLE (Diya TV) — In a significant move shaking up the artificial intelligence (AI) landscape, Satya Nadella’s Microsoft has inked a deal worth $650 million with the AI startup Inflection, primarily for licensing its cutting-edge software. This transaction follows Microsoft’s recent announcement of hiring most of Inflection’s staff, including its co-founders, Mustafa Suleyman and Karén Simonyan, signaling a strategic pivot within the industry.

The deal, resembling an “acqui-hire” without an acquisition, entails Microsoft paying $620 million to license Inflection’s AI models and an additional $30 million to waive any legal rights related to the mass hiring. These financial terms, first reported by The Information, underscore the tech titan’s eagerness to bolster its AI capabilities amidst intensifying competition and growing regulatory scrutiny.

Inflection AI, which garnered significant investor interest last year with a valuation of $4 billion after raising $1.3 billion, is now positioned to provide its stakeholders with a modest return on investment. However, the company’s shift in focus, marked by the appointment of a new CEO, Sean White, indicates a strategic realignment towards serving enterprise clients.

With Microsoft leading the charge, Inflection’s models are expected to find a new home on the Azure cloud service, further enhancing Microsoft’s AI offerings for consumer products. Mustafa Suleyman, now heading Microsoft’s consumer AI business, and Karén Simonyan, serving as the chief scientist, are set to play pivotal roles in driving innovation within the newly created Microsoft AI unit.

Despite the transformative potential of this partnership, it is likely to draw increased regulatory scrutiny on Microsoft, particularly from the U.S. Federal Trade Commission.