BRUSSELS, Sept 18 (Reuters) - EU antitrust regulators

will not take action against Microsoft's ( MSFT ) hiring of

artificial intelligence startup Inflection's staff including its

co-founders after seven EU countries dropped their requests

asking their bigger peer to examine the deal, the European

Commission said on Wednesday.

The move by the seven national antitrust watchdogs followed

a landmark court ruling earlier this month prohibiting the EU

enforcer from examining merger cases which fall below the EU's

merger revenue threshold.

Critics said such reviews were regulatory over-reach.

"The Commission will take no decision in this matter," the

EU executive said.

Still it said the deal amounted to a merger as the deal

means the 'new Inflection' would shift its focus to a different

activity, namely its AI studio business.

"The Commission regards the agreements entered into between

Microsoft ( MSFT ) and Inflection as a structural change in the market

that amounts to a concentration as defined under Article 3 of

the EUMR," it said, referring to the bloc's merger rules.