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Microsoft took over much of the staff and licenses of AI startup Inflection AI last week. In compensation, the tech giant is now paying $650 million (€601 million).

Microsoft recently announced that it had recruited two out of three Inflection AI’s founders, Mustafa Suleyman and Karén Simonyan. Both founders of the AI startup will join the tech giant as CEO and Chief Scientist leading Microsoft AI. This department will focus on further developing Copilot and all other consumer-facing AI solutions.

Microsoft acquired two of the three co-founders and hired 70 other employees from the AI startup, effectively “acquiring” the company without an actual transaction.

In compensation, according to a source to Bloomberg, Microsoft is paying Inflection AI $620 million to license its software and LLMs. In addition, the tech giant is paying an additional $30 million to buy off all legal ramifications of recruiting the Inflection AI staff, The Information writes.

Action at Inflection AI

In response, Inflection AI is now trying to salvage what it can. The AI company wants to outsource some of its computing power to train LLMs. According to a Bloomberg source, it is also asking for a refund from its cloud computing partner, CoreWeave.

Sean White from Mozilla has been named the new CEO. Inflection AI’s third co-founder, Reid Hoffman, will remain with Inflection AI and also remain on the Microsoft board of Directors.

Inflection AI plans to continue operations as usual.

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