Microsoft AI Startup Deal Investigated by FTC: What To Know
The FTC is questioning whether Microsoft's agreement with Inflection AI was structured to avoid an antitrust review. Here's what you need to know.
Microsoft (MSFT) shares are trading lower Thursday on news the Federal Trade Commission (FTC) is probing whether the tech giant structured its recent deal with artificial intelligence (AI) startup Inflection AI to avoid an antitrust review, according to The Wall Street Journal.
In March, Microsoft hired Inflection AI's co-founder and nearly all of its employees, agreeing to pay the startup approximately $650 million as part of a licensing deal to resell its technology, the WSJ said.
However, Microsoft did not acquire the company outright, so the FTC is trying to determine if the deal was structured so that MSFT can take control of Inflection AI without a full review of the transaction by the regulatory agency, the report added, citing a person familiar with the matter and records viewed by The Wall Street Journal.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If the FTC finds that Microsoft should have reported the transaction and submitted it for review, it could bring enforcement action, which could include a fine or suspension of the transaction while it conducts a full investigation. A Microsoft spokesperson said the company is confident it complied with antitrust laws.
Inflection AI, a prominent name in artificial intelligence and the creator of the Pi chatbot, raised over $1.3 billion in a funding round led by Microsoft and top AI stock Nvidia (NVDA) back in June 2023.
In January, the FTC announced an investigation into Microsoft's relationship with OpenAI, as well as other large technology companies with investments in generative AI companies.
"History shows that new technologies can create new markets and healthy competition," FTC Chair Lina Khan said in a January 25 statement. "As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity. Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."
Where does Microsoft stock stand with analysts?
Microsoft is one of the best-performing Dow Jones stocks this year, up nearly 13%. The company's long-term gains are even more impressive and if you invested $1,000 in MSFT stock 20 years ago, you'd be sitting on a handsome return.
Unsurprisingly, then, analysts are very bullish on the blue chip stock. According to S&P Global Market Intelligence, the consensus analyst target price for MSFT stock is $482.21, representing implied upside of about 14% to current levels. Meanwhile, the consensus recommendation is a Strong Buy.
Related Content
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
Best Amazon Prime Day Early Deals
Check out these early deals on everything from tech and clothing to household items and kitchen gadgets now before Amazon Prime Day 2024 drops
By Kathryn Pomroy Published
-
Southwest Business Card Launches $1,800 Bonus Offer
This is the best Southwest business card offer we've seen yet. New cardholders earn 120,000 bonus Rapid Rewards points, worth about $1,800.
By Ellen Kennedy Published
-
Stock Market Today: Stocks Give Up Gains Even as Inflation Ebbs
The main indexes closed lower Friday but ended the first half with impressive gains.
By Karee Venema Published
-
Nokia to Acquire Infinera in $2.3 Billion Deal: What to Know
Nokia will acquire Infinera as it looks to expand its optical-networking presence. Here's what you need to know.
By Joey Solitro Published
-
Trump Media & Technology Stock Stays Volatile After Debate
Trump Media & Technology stock has traded erratically in recent months and last night's presidential debate sparked more volatility in DJT shares.
By Joey Solitro Published
-
Nike Stock Sinks on Dismal Sales Forecast: What to Know
Nike stock is spiraling Friday after the athletic and apparel retailer missed sales estimates for its most recent quarter and lowered its outlook for its new fiscal year.
By Joey Solitro Published
-
Stock Market Today: Stocks End Higher Ahead of May PCE Data
Micron Technology, Walgreens Boots Alliance and Levi's were three of Thursday's biggest movers.
By Karee Venema Published
-
How to Find the Best Small-Cap Stocks to Buy
Wall Street's best small-cap stocks to buy include biotech, real estate and industrials names.
By Dan Burrows Published
-
Levi Strauss Stock Spirals on Revenue Miss: What to Know
Levi Strauss stock is lower Thursday after the denim company's top line missed estimates amid a "cautious" consumer environment.
By Joey Solitro Published
-
Walgreens Stock Hits 27-Year Low After Massive Earnings Miss
Walgreens Boots Alliance stock is tanking Thursday the pharmacy retailer came up short of earnings expectations and slashed its full-year outlook. Here's what you need to know.
By Joey Solitro Published