Since OpenAI launched ChatGPT with seismic impact in 2022, the generative AI sector has been in boom (or bubble) territory. Investors have recognised just how dramatically this technology will change how society works, both in the business and consumer realms.
Inflection AI was a major part of this.
It had built a chatbot in a similar vein to ChatGPT, called Pi, which runs on its own AI model to provide a personal AI. It claimed Pi could be a coach, confidante, creative partner, sounding board and assistant, although clearly it hadn’t nailed down the pesky detail of a business model yet.
Major player
Inflection AI hadn’t been sitting on the vast trove of funds it raised (which totalled $US1.5 billion when an earlier round is included). It invested in a huge amount of infrastructure to power its AI development, announcing last year it was building the largest AI cluster in the world, comprising 22,000 Nvidia H100 Tensor Core chips.
The huge interest garnered by Tuesday’s announcement by Nvidia about its next generation of chips shows how significant Inflection’s plans were, yet its founders are just walking away?
Had Microsoft announced it was buying Inflection and bringing its team on board – an acqui-hire in industry terms – competition regulators would have been all over it, but this is apparently just a straightforward case of people changing jobs.
While Suleyman and Simonyan, and some of Inflection AI’s best and brightest take the tour around their new offices in Microsoft’s Redmond HQ, a rump of their former colleagues are left to carry on under a new CEO.
Former Mozilla executive Sean White has been appointed to switch directions at Inflection, and start selling its AI capabilities to businesses.
Just as with Microsoft’s announcement of the changes, Inflection is acting like it was always part of the plan.
“As an AI studio, we have long planned to make our technology available to developers and enterprises. And over the last year, we’ve heard countless times that people haven’t been able to replicate the unique conversational style of Pi with publicly available models,” the company said.
“Our plan is to lean into our AI studio business, where custom generative AI models are crafted, tested and fine-tuned for commercial customers.”
It’s a crock. This is a further consolidation of the fast-growing and hugely important AI sector, with a competitor disappearing effortlessly inside the Microsoft mothership.
Microsoft mafia
The question about angry Inflection AI investors at the start of this article was a bit of an empty one because among its biggest backers are Microsoft itself, LinkedIn co-founder and Microsoft board member Reid Hoffman, and Microsoft co-founder Bill Gates. Another major investor is Nvidia, which is already doing fine as a supplier to Inflection AI, and Greylock Partners, a VC firm where Hoffman is a partner.
What of Inflection AI’s third co-founder you ask? Why aren’t they now running it? Well, that is because that is also Hoffman … What a happy Microsoft family.
Microsoft CEO Satya Nadella has proven himself time and again to be the smartest operator of all the big tech CEOs. He and the company’s vice-chairman and president, Brad Smith (who played a major legal role in the company’s huge antitrust case at the turn of the century), have moved the company to the head of the big tech pack in the AI game.
It has also invested $US13 billion in OpenAI, of course, and has a seat on its board. Presumably to avoid antitrust problems, OpenAI investors do not own a percentage of the company, but are entitled to a commensurate share of its eventual profits; figure that one out.
When OpenAI became embroiled in an internal spat last year that saw its figurehead CEO Sam Altman briefly removed, Nadella and Microsoft were at the heart of it. Altman was even briefly hired by Nadella, in what would have been an almost identical arrangement to Suleyman’s hiring.
This month, Microsoft also invested €15 million ($25 million) in French OpenAI rival Mistral, having announced a multi-year strategic partnership with the company last month.
It is not just Microsoft buying up, backing and hiring the competition. Anthropic – maker of ChatGPT rival Claude – received a $US3.4 billion investment from Amazon last year, after previously banking a $US2 billion investment from Google’s parent company Alphabet.
The AI era is bringing a lot of big new name companies to the fore, but it increasingly looks like tech’s old guard will still have it all stitched up.
