The Netherlands Authority of Consumers and Markets (ACM) withdrew its request for the European Commission to investigate Microsoft's acquisition of start-up Inflection. ACM had concerns about the acquisition's impact on innovation and options for consumers and businesses in the field of Artificial Intelligence (AI). Multiple Member States had requested the European Commission to investigate the acquisition.

A recent ruling by the European Court of Justice (ECJ) in the Illumina-Grail case revealed that the European Commission cannot handle requests from Member States that lack the competence to review the transaction. This ruling underscores the need for new powers to assess acquisitions that may not meet notification thresholds but could still have negative effects in specific countries like the Netherlands.

Martijn Snoep, Chairman of the Board of ACM, expressed concerns about potential negative consequences of Microsoft's stronger position post-acquisition, such as reduced innovation or options for consumers and businesses in the Netherlands. ACM advocates for new powers to assess such acquisitions and prevent market power, enabling referrals to the European Commission for transactions with broader European implications.

In March 2024, Microsoft acquired a significant portion of Inflection's staff and obtained intellectual property rights over its AI model and chatbot Pi. Both companies are active in AI, including AI chatbots. Inflection's success with chatbot Pi led to substantial user growth. The acquisition did not trigger notification requirements due to turnover thresholds, but ACM believed an assessment was necessary to prevent negative impacts on the market for AI chatbots.

The ECJ ruling on the Illumina-Grail case clarified that the European Commission can only assess smaller acquisitions at the request of national competition authorities with relevant assessment powers. Since ACM lacks the authority to assess acquisitions below notification thresholds, it withdrew the referral request for the Microsoft-Inflection deal. Other Member States also withdrew requests following consultations with the European Commission.

ACM supports the introduction of a 'call-in power' to assess smaller acquisitions that could harm consumers and businesses in the Netherlands, even if they do not meet notification thresholds. This power would allow ACM to evaluate or refer potentially problematic acquisitions to the European Commission for broader European-level consequences.