Microsoft just set the stage for an all-out AI talent war with Google

• Microsoft is opening a new AI division in London, which is home to Google's DeepMind.
• The new hub sets the stage for a heated talent war between the two companies.
• Google has been trying to stop bleeding talent. It may now have to try harder.

Microsoft is opening a new AI unit in London, putting itself firmly on the turf of its biggest AI rival: Google DeepMind.

The announcement comes just weeks after Microsoft hired DeepMind cofounder Mustafa Suleyman to run its new AI division. In a blog post published Monday, Suleyman said the new London unit will be run by former DeepMind researcher Jordan Huffman.

Microsoft already has offices in the UK's capital and previously pledged to invest £2.5 billion in UK data centers over the next three years. But the fact this new hub is focused entirely on AI — and is being run by former DeepMinders — should give Google plenty of reasons to worry. In the battle for top AI talent, a bigger London presence could be a savvy move for Microsoft.

"There is an enormous pool of AI talent and expertise in the UK, and Microsoft AI plans to make a significant, long-term investment in the region as we begin hiring the best AI scientists and engineers into this new AI hub," wrote Suleyman in the announcement on Monday.

DeepMind, which was founded in 2010 and acquired by Google in 2014, has long been considered the crown jewel of the UK's AI scene. It's also become an increasingly vital asset to Google, which for many years allowed the AI subsidiary to operate independently.

Last year, in response to increased pressure from rivals such as OpenAI, Google merged DeepMind with its central AI unit Brain, forming the new Google DeepMind.

Google DeepMind, which has more than 2,000 employees, is leading work on Gemini, the company's answer to OpenAI's GPT-4 large language model, making it a crucial piece in Google's strategy for artificial intelligence.

But as rivals such as Meta and Microsoft try to shore up their artificial intelligence units with greater resources and talent, they are attempting to poach some of Google's prized researchers, with reports of $10 million pay packets. Meta itself recently lost three top AI employees, while Google has lost a steady stream of employees to OpenAI over the past year.

Startups are also starting to pay more for early-stage hires in order to compete with Big Tech offers, Alex Libre, the cofounder and principal recruiter of Einstellen Talent, recently told BI's Aaron Mok.

Google DeepMind has been trying to retain talent by offering bigger compensation packages to some employees, according to people familiar with the matter. In one case, Google cofounder Sergey Brin called a DeepMind researcher who was preparing to leave OpenAI and convinced them to stay.

As the Big Tech AI arms race for talent continues to heat up, Google may have to work even harder to stem the bleeding.

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