Microsoft (MSFT) has received a green light from the UK’s Competition and Markets Authority (CMA) for its partnership with Inflection AI, an artificial intelligence startup. The regulator also approved Microsoft’s hiring of Inflection’s key employees, including co-founder Mustafa Suleyman.
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The CMA concluded that Inflection AI’s small size and limited impact did not pose a threat to competition in the UK market. This decision came as a relief to MSFT, which has faced intense regulatory scrutiny in recent months.
MSFT Grapples with Legal Issues
In addition to the CMA’s interest, Microsoft’s collaboration with Inflection AI has caught the attention of U.S. regulators, who are investigating whether the deal could stifle competition in the AI market. Moreover, the CMA is considering whether MSFT’s partnership with ChatGPT creator OpenAI warrants a similar investigation.
Not just MSFT, but other tech giants are also facing similar probes around the globe. The CMA is investigating Amazon’s (AMZN) $4 billion investment in Anthropic AI, with a decision expected by October 4, 2024. Additionally, the U.S. FTC has launched similar probes into Microsoft-OpenAI and Amazon-Anthropic deals.
Analyzing Microsoft’s Exposure to Legal Risks
Legal and regulatory challenges are not new for Microsoft. The tech giant has a history of dealing with legal and regulatory issues. As MSFT is subject to several litigations, TipRanks’ Risk Analysis tool shows its legal and regulatory risk exposure is much higher than the industry average.
It’s worth noting that MSFT’s legal and regulatory risks account for 29.6% of its total risks, well above the industry average of 20.3%.
Is Microsoft a Buy, Sell, or Hold?
Despite legal issues, Wall Street analysts are bullish about MSFT’s prospects. Based on 31 Buy recommendations, the stock has a Strong Buy consensus rating.
Shares of the company have increased by over 9% so far this year. Analysts’ average price target for MSFT stock of $504.91 implies 23.48% upside potential from current levels.
