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Produced by Huxiu Technology Group

Author: Yu Yang

Editor: Miao Zhengqing

On July 17, Microsoft faced an antitrust investigation in the UK, triggered by its partnership with Inflection Al. British antitrust officials are weighing whether Microsoft's relationship with the startup poses a threat to fair competition in the market.

However, Microsoft's Mercury retrograde has just begun.

Inflection AI is a machine learning startup headquartered in Palo Alto, California, USA, founded in 2022. The company focuses on redefining human-computer interaction, aiming to reduce people's dependence on computers through its artificial intelligence technology and enable machines to better understand human language. Its founding team consists of people with backgrounds in DeepMind, Google, Microsoft,OpenAIIt is composed of top artificial intelligence experts who have worked at companies such as Meta.

Inflection AI’s first major product is a chatbot called Pi, which is designed to be a “warm and supportive” companion that serves users through natural, fluid text and voice conversations, providing emotional support rather than just information. Pi can engage in personal conversations with users through the app or via the web, WhatsApp, Instagram or Facebook.

With this, Inflection AI received US$225 million in venture capital funds and US$1.3 billion in investment in May 2022 and June 2023 respectively. These investments also made Inflection AI the second largest startup in the field of artificial intelligence in terms of financing, second only to Open AI.In this investment in June 2023, Bill Gates, Eric Schmidt, Microsoft, Nvidia and Reid Hoffman were the lead investors.

In March 2024, Microsoft made another move, agreeing to pay Inflection AI $650 million to license its AI software. Not only that, Microsoft also announced the hiring of Inflection AI co-founders Mustafa Suleyman and Karén Simonyan, as well as most of the company's employees.

This behavior attracted the attention of the UK Competition and Markets Authority (CMA), which subsequently announced an antitrust investigation into the transaction. The CMA stated that they had reason to believe that the transaction could have a negative impact on market competition and decided to conduct a detailed review to assess the potential impact of the transaction on the competitive environment, prices and consumer choice.

The CMA is moving quickly. In April, the CMA issued an Invitation for Comments (ITC) to interested third parties, which is the first step in the information gathering process. Based on this, the CMA will decide whether to launch a formal Phase 1 investigation.On July 17, 2024, the CMA announced the launch of a formal Phase I investigation and will decide by September 11 whether to launch a more in-depth Phase II investigation.

In addition to the UK, the US Federal Trade Commission (FTC) is also reviewing the deal and has issued subpoenas to Microsoft and Inflection AI, requesting relevant documents from the past two years.

In response, Microsoft said that the acquisition of Inflection AI aims to promote the development of artificial intelligence technology and provide better products and services to users around the world. At the same time, it promised to provide the CMA with the required information so that it can complete the investigation quickly.

One wave after another.

At 15:16 on the afternoon of July 19, Windows users in many parts of the world encountered blue screens on their computers, and there were problems such as computer crashes and signal interruptions. As of the 21st, this incident has affected about 8.5 million Windows devices worldwide, covering multiple industries such as aviation, railways, banking, media, and medical care. This incident was jokingly called the biggest "earthquake" in the history of the Internet digital world by netizens.

In the darkest moment of the "blue screen", some users "took a holiday early" because their computers could not run normally; some were even more horrified.West Japan Railway Company was unable to obtain train location information, the Australian Broadcasting Corporation encountered technical failures, the London Stock Exchange was also affected, several US airlines grounded flights due to communication problems, and more than 10 hospitals across the United States were affected and canceled some surgeries that day...

Microsoft quickly identified the source of the problem.

About 50 minutes later, Microsoft responded that the "blue screen" was caused by a cybersecurity companyCrowdStrikeThe incident was caused by a software update from Microsoft that contained a logic error that caused the operating system to crash. A fix was quickly deployed, stressing that this was not a security incident or cyberattack.

However, investors were not convinced. CrowdStrike's pre-market decline widened to 20%. It also affected Microsoft, whose US stock fell 3% in the night trading. Coupled with the US stock cycle's own reasons, Microsoft's stock price hit a new low in a month.

Data from flight tracking website FlightAware.com showed that on the third day after the incident, more than 1,500 flights within, to and from the United States were canceled, and more than 7,400 flights were delayed.At present, a considerable number of these devices have returned to normal operation. But for Microsoft, this is far from over.

According to the CEO of Anderson Economic Group, a US research institution, the economic losses caused by the Microsoft technology failure are likely to exceed $1 billion.According to the relevant agreements for Azure cloud services, Microsoft may also face huge compensation.

However, after the avalanche, some changes are quietly taking place.

In the A-share market, investors have found a new target - domestic security and operating system companies.

Because the Microsoft blue screen incident proved the value of autonomous systems in this era.For example, since most domestic airlines use the CAAC system, whose operating environment is based on Linux and does not use Microsoft's Azure cloud service or Amazon's AWS, the flight operations of major domestic airlines including Air China, China Southern Airlines, and China Eastern Airlines have not been affected.Inspired by this, the localization of software and systems may accelerate in the future.

As of the close of July 19, the share price of enterprise service company Neusoft rose 3.87%, ArcherMind Technology rose 5.7%, China Software rose 4.32%, security company 360 rose 1.8%, Qi'anxin rose 3.02%, and the share price of autonomous operating system company Kylin Security soared 7.76%.

Microsoft’s two Mercury retrogrades actually point to the same problem: security.

The security of the market and the security of the Internet digital world are two sides of the same coin.

Mary Vasek, an expert at the Department of Computer Science at University College London, said that the over-reliance of the global technology system on the software of a few technology companies is one of the reasons why the problem is so serious. The core of the problem is that Microsoft, as an industry standard software, is almost everywhere. Once the vulnerability is exposed, it will quickly spread to various systems.

From this point of view, the CMA’s concerns are “inevitable”.

The "blue screen" incident has alerted people to the value of "security" in the cloud and AI era. CrowdStrike is a company that provides endpoint security, intelligence threat and cyber attack security services. Due to the negligence of quality control inspection before software updates, this catastrophic consequence has caused flight cancellations, train disconnection, medical delays, etc., affecting not only the technology ecosystem, but also countless lives.

No snowflake is innocent, which means,Once the butterfly flaps its wings, no one is immune.