Microsoft pays Inflection $650 million in licensing deal while poaching top talents, source says

FILE PHOTO: Microsoft offices in Issy-les-Moulineaux near Paris, France, February 9, 2024. REUTERS/Gonzalo Fuentes/File Photo

(Reuters) -Microsoft has agreed to pay AI startup Inflection about $650 million in cash in an unusual deal that would allow Microsoft to use Inflection's models and hire most of the startup's staff including its co-founders, a person familiar with the matter told Reuters on Thursday.

The high-profile AI startup's models will be available on Microsoft's Azure cloud service, the source said. Inflection is using the licensing fee to pay Greylock, Dragoneer and some other investors, the source added, saying the investors will get a return of 1.5 times what they invested.