Microsoft’s (NASDAQ:MSFT) hiring of key staff from AI startup Inflection, including co-founder Mustafa Suleyman, is under initial merger investigation in the UK. The UK’s Competition and Markets Authority (CMA) is investigating whether the hiring of Suleyman and most of Inflection’s other startup staff could reduce competition in AI.
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The CMA has stated that if it finds sufficient reason to investigate further, an in-depth “Phase 2” inquiry will follow, with a decision expected by September 11.
Microsoft’s Response to the Probe
In response, Microsoft stated that it remains confident that hiring talented individuals promotes competition. The company also mentioned its willingness to cooperate with the CMA. Suleyman was appointed Executive Vice President and CEO of Microsoft AI, while Karen Simonyan joined as Chief Scientist. Microsoft AI is a newly formed unit of the tech giant focusing on AI products.
According to various reports, Microsoft paid $650 million to Inflection for licensing its AI model and reselling it through the Azure cloud platform. The CMA aims to determine whether this licensing deal and the hiring of Inflection staff resulted in a merger that could lead to a “substantial lessening of competition” in the AI space.
Cloud services are a significant component of the tech giant’s revenue, with Office products and cloud services contributing more than 20% of the company’s total revenues.
Is Microsoft Stock a Buy or Sell?
Analysts remain bullish about MSFT stock, with a Strong Buy consensus rating based on 33 Buys and one Hold. Over the past year, MSFT has increased by more than 30%, and the average MSFT price target of $502.56 implies an upside potential of 12% from current levels
