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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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
- Kiplinger's Earnings Calendar for This Week
- Should You Invest in Nvidia After Its Stock Split?
- Analysts' Top S&P 500 Stocks to Buy Now
-
My wife says our $4.3 million savings are 'our grandkids' inheritance.'I want to travel while we are still healthy, but my wife wants to pass down our wealth. Who is right?
-
Senior Living Communities: A Guide to Finding the Right FitSenior living facilities have improved and are as diverse as the people who inhabit them. Now, they're more than just a place to go — they're a place to grow.
-
3 Common Myths About Working With a Financial PlannerThink financial planners are only for the wealthy and that AI can replace human advice? Nope. Even people with moderate wealth need professional advice.
-
Today's Senior Living Communities Are Not Your Grandma's 'Old Folks' Home': An Expert Guide to Shopping for the Right Fit
Senior living facilities have improved and are as diverse as the people who inhabit them. Now, they're more than just a place to go — they're a place to grow.
-
3 Common Misconceptions About Working With a Financial Planner
Think financial planners are only for the wealthy and that AI can replace human advice? Nope. Even people with moderate wealth need professional advice.
-
Should You Consider Investing in the Quantum Computing Sector? This Investment Adviser Has Some SuggestionsInvestors interested in quantum computing could consider ETFs focused on cloud services enabling small businesses to use big technology.
-
S&P 500 Hits New High Before Big Tech Earnings, Fed: Stock Market TodayThe tech-heavy Nasdaq also shone in Tuesday's session, while UnitedHealth dragged on the blue-chip Dow Jones Industrial Average.
-
Yes, Artificial Intelligence Stocks Are BoomingIt's fair to ask about the latest tech boom, "Is it really different this time?"
-
I'm an Estate Planning Attorney: These Are the Estate Plan Details You Need to Discuss (And What to Keep Private)Gen Xers and Millennials would like to know if they're going to inherit (and how much), but Baby Boomers in general don't like to talk about money. What to do?
-
I'm a Financial Adviser: This Is How You Can Minimize the Damage of Bad Market Timing at RetirementPoor investment returns early in retirement on top of withdrawals can quickly drain your savings. The ideal plan helps prevent having to sell assets at a loss.
-
'You Owe Me a Refund': Readers Report Challenging Their Attorneys' BillsThe article about lawyers billing clients for hours of work that AI did in seconds generated quite a response. One law firm even called a staff meeting.
