CADE orders Microsoft to notify transaction with Inflection AI and raises alert for big techs and AI deals

In May 2026, CADE brought four major transactions involving technology giants and artificial intelligence startups into the spotlight: Nvidia/Runway AI, Google/Character AI, Microsoft/Inflection AI, and Microsoft/Mistral AI. None of these transactions met the turnover thresholds set forth in Article 88 of Law No. 12,529/2011, reigniting a crucial debate: how should merger control be applied in digital markets?

At the opening of the judgment session, Acting President Diogo Thomson read a statement on behalf of the Tribunal, reinforcing that transactions in digital, technological and artificial intelligence markets may involve the transfer of significant assets, capabilities, technology, intellectual property and strategic talents, even if companies do not have significant revenues in Brazil.

Although most of the cases were ultimately dismissed, the message was clear: CADE is willing to rely on Article 88, Paragraph 7, of Law No. 12,529/2011 to review transactions that would otherwise fall outside the scope of the traditional filing thresholds. The Tribunal’s votes indicate that, in digital and artificial intelligence markets, competitive assessment extends beyond the formal structure of a transaction – the focus is now on its “economic substance”.

Check out the key highlights of the judgment session:

• Microsoft/Inflection AI: CADE orders the transaction to be notified

Announced in 2024, the transaction involved Microsoft’s hiring of several Inflection AI employees, including co-founders Mustafa Suleyman – later appointed Executive Vice President of Microsoft and CEO of the newly created Microsoft AI division – and Karen Simonyan, alongside an intellectual property licensing agreement valued at USD 620 million.

Reporting Commissioner José Levi characterized the transaction as a reverse acqui-hire – a structure through which a company incorporates key personnel and related assets into its business without relying on traditional corporate acquisition mechanisms. In his view, the transaction constituted an acquisition of assets and, therefore, a transaction subject to Brazilian merger control rules.

Although Inflection AI generated no revenue in Brazil, the Tribunal exercised its authority under Article 88, Paragraph 7, of Law No. 12,529/2011 and ordered Microsoft to formally notify the transaction within 30 days.

• Google/Character AI: dismissed, but with important developments

The Google/Character AI transaction, closed in 2024, also involved technology licensing arrangements and the transfer of strategic personnel – hallmarks of an acqui-hire transaction.

Although the gun-jumping investigation was ultimately dismissed, Reporting Commissioner Camila Cabral emphasized that the decision “does not represent a finding of competitive irrelevance or a blanket endorsement of similar transactions in the future.” While recognizing that the transaction could be characterized as an economic concentration, the Reporting Commissioner concluded that requiring a formal notification to CADE would not constitute, at that stage, “the most appropriate institutional response,” particularly given the time elapsed since the transaction had been consummated.

Despite the dismissal, the case provided important guidance regarding the application of Article 88, Paragraph 7, of Law No. 12,529/2011 and laid the groundwork for new investigations involving similar transactions entered into by Google. In particular, the Google/Windsurf and Google/Hume AI transactions are expected to move forward in the coming months.

• Nvidia/Run and Microsoft/Mistral AI: dismissed without further discussion

Both cases were dismissed without further discussion. The Tribunal concluded that neither transaction met the requirements for mandatory notification, nor were there sufficient grounds to trigger Article 88, Paragraph 7, of Law No. 12,529/2011.

The Nvidia/Run transaction involved Nvidia’s acquisition of 100% of the share capital of Run Labs Ltd., a startup with no significant presence in Brazil. The Microsoft/Mistral AI transaction, in turn, involved an investment by Microsoft through convertible notes which, if converted into equity, would result in an approximately 0.31% shareholding in the company.

The table below provides a comparison of the main aspects of each case reviewed by the Tribunal:

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