Microsoft Corporation’s (NASDAQ:MSFT) shares are trading relatively flat in the premarket session on Tuesday.

Mizuho analyst Gregg Moskowitz maintains Microsoft with an Outperform and raises the price target from $450 to $480.

On Tuesday, the U.K. Competition and Markets Authority said it is investigating Microsoft’s hiring of certain former employees of Inflection AI, Inc. and its entry into associated arrangements with Inflection.

The deadline for phase 1 decision is September 11, 2024. The CMA is investigating whether Microsoft’s recruitment of former Inflection employees and their related agreements may constitute a merger under the Enterprise Act 2002.

According to Benzinga Pro, MSFT stock has gained over 31% in the past year. Investors can gain exposure to the stock via ETF Opportunities Trust T-Rex 2X Long Microsoft Daily Target ETF (BATS:MSFX) and SPDR Select Sector Fund – Technology (NYSE:XLK).

The CMA said it aims to determine if this has or could potentially lead to a significant reduction in competition within the U.K. markets for specific goods or services.

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The regulatory agency moved quickly to address investments by major tech firms in AI startups, citing concerns that Silicon Valley giants were leveraging these investments to influence and dominate emerging markets, reported Bloomberg.

The agency indicated it would utilize merger control regulations to assess whether certain investments warrant scrutiny in the U.K., acknowledging that these partnerships may not follow conventional deal structures. Initially examining Microsoft’s investment in Mistral AI, it concluded that Microsoft did not gain the capability to influence Mistral’s commercial decisions significantly.

Earlier this year, Microsoft hired Mustafa Suleyman, along with Karén Simonyan, Inflection’s Chief Scientist and co-founder, and most of the startup’s employees.

Despite raising over $1.5 billion and launching a chatbot named PI, Inflection continued to grapple with developing a viable business model, as Suleyman had indicated post-launch, the report added.

“We are confident that the hiring of talent promotes competition and should not be treated as a merger,” Microsoft said. “We will provide the UK CMA with the information it needs to complete its inquiries expeditiously,” the report added.

Price Action: MSFT shares are trading higher by 0.04% to $454.15 premarket at last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Shutterstock

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