Microsoft in Talks with AI Startup Adept, But Denies Acquisition Plans

Adept, an emerging AI startup that has garnered over $400 million in funding since its inception two years ago, has been engaged in discussions with Microsoft, sources close to the matter reveal. Despite Microsoft’s existing investment and commercial agreement with Adept, the tech giant has clarified that it does not intend to acquire the startup. Microsoft spokesperson Frank Shaw emphasized, “We have zero intent to purchase the company in whole or in part,” following reports about the ongoing talks.

Sources disclosed to Fortune that Adept has signed a term sheet with Microsoft, although the specifics and the financial details of the arrangement remain undisclosed. The agreement reportedly does not constitute a standard acquisition, with one source citing information from a high-ranking insider at Adept.

Microsoft has been assertive in positioning itself as a leader in AI technology, with substantial investments including a $13 billion stake in OpenAI, the creator of ChatGPT. Additionally, it has invested in other startups like France’s Mistral and recently integrated the senior leadership of Inflection AI into its team.

Founded in 2022 by alumni of OpenAI and Google, Adept has been focusing on leveraging transformer neural network architectures to develop an AI assistant aimed at automating business workflows. Despite an impressive initial demo, Adept has faced challenges in securing major commercial clients, leading to a potential exploration of strategic sales or partnerships as reported earlier this year.

The structure of Microsoft’s interactions with startups like Inflection has drawn scrutiny and sparked investigations by regulatory bodies, given the unconventional nature of these deals. The U.S. Federal Trade Commission has launched an investigation into the Microsoft-Inflection deal, which involved a significant licensing fee paid to Inflection’s investors without a formal acquisition, raising concerns about antitrust implications.

This backdrop of strategic maneuvers and regulatory scrutiny paints a complex picture of Microsoft’s ambitions in AI and its interactions with innovative startups in the sector.