Eye On AI: Microsoft Continues To Try To Tiptoe Around Regulation

This column is a look back at the week that was in AI. Read the previous one here.

It certainly has been a busy period for the news cycle, so it’s understandable you may have missed some stuff in the past few days.

That includes a couple of things that involve perhaps the biggest name in AI — Microsoft.

A few weeks ago, the tech giant announced it was leaving its board position at OpenAI (good friend Apple also left), saying the startup’s governance had improved so much it no longer needed the Redmond, Washington-based goliath’s oversight.

Uh-huh, sure.

A week later, it was announced that the company’s unusual relationship with generative AI startup Inflection AI would be referred for an initial merger investigation in the U.K.

That’s funny, because Microsoft went to great lengths to frame its deal with Inflection as anything but an acquisition — rather it just hired the startup’s co-founders, most of its 70-person staff, and licensed its technology.

But it wasn’t an acquisition.

The initial investigation will last through the summer, and there’s no telling how it will play out. Microsoft scored a win of sorts in June when the EU Commission said it was dropping its probe into the company’s relationship with OpenAI.

However, it does seem Microsoft is playing with fire. There appears to be an announcement every month about some agency — foreign or domestic — looking into its AI dealings. Jumping off OpenAI’s board seemed to be a move — albeit very small — by two AI giants to try to avoid more antitrust scrutiny.

The Inflection AI deal seemed to be screaming for that scrutiny and now it seems like it’ll be getting it.

There is no doubt of Microsoft’s intense interest in the space. Its venture arm, M12 just led a $40 million round for San Francisco-based Armada, which helps with the implementation of artificial intelligence in an edge computing environment.

Nevertheless, Microsoft may be getting closer to real problems with every AI deal it consummates. While AI holds the promise of reducing — or even eliminating — the workload for a lot of people, it seems like it will only increase it for the Microsoft legal team.

Things that caught our eye and other stuff:

Just a month ago we wrote about AI’s impact on the legal tech industry, and this week provided a perfect illustration with not one, but two huge raises.

On Tuesday, Vancouver-based legal tools platform Clio raised a big $900 million Series F at a $3 billion valuation led by New Enterprise Associates. On the same day, San Francisco-based artificial intelligence startup Harvey raised a $100 million Series C led by GV with participation from the likes of OpenAI, Kleiner Perkins and Sequoia Capital at a $1.5 billion valuation. (Slightly less than the previously reported $600 million at a $2 billion valuation the startup was said to have been looking for.)

The two rounds alone make up for nearly two-thirds of the $1.6 billion the legal tech industry has raised in venture this year, per Crunchbase data. It also means legal tech funding has nearly doubled from the $877 million it raised all of last year.

AI is having a lot to do with that, as AI startups are catering to the legal world — traditional slow adopters of tech — to help with mundane and routine tasks involving things like legal discovery and client management.

While venture funding remains slightly rocky, legal tech is cleaning up thanks to AI.