OpenAI-Microsoft Rift Takes an Ugly Turn, With Courtroom Drama Possible  

The rift between Microsoft (MSFT) and artificial intelligence (AI) startup OpenAI has started to turn uglier, with the possibility of the dispute reaching federal courts. Reports suggest that executives at OpenAI are discussing the possibility of accusing Microsoft of anticompetitive behavior during their current business partnership.

Microsoft first partnered with OpenAI in 2019 and has since invested a massive $14 billion into the start-up company, becoming one of the major backers behind ChatGPT and other AI technologies. In recent years, however, the relationship between the two has soured to the point where OpenAI is now considering seeking a federal regulatory review of its contract with Microsoft for potential violations of antitrust laws, as well as launching a public campaign to discredit the technology giant.

OpenAI-Microsoft Partnership Reaches an Impasse

One of the focal points of impasse is that OpenAI requires Microsoft’s permission to convert into a public-benefit entity, but the two sides have been unable to reach any amicable agreements on the matter. The two are said to be discussing revising the terms of Microsoft’s investment, particularly its potential future equity stake in the AI startup. However, their differences have reached a “boiling point” and threaten to end up in court.

Such a move by OpenAI would severely damage one of the most vital technology partnerships in the AI field and might even end the relationship between the two companies altogether. Analysts appear to agree that the partnership has benefitted both Microsoft and OpenAI in securing a large share of the lucrative AI market.

Nonetheless, OpenAI seems to be looking for ways to cut its reliance on Microsoft. OpenAI has announced plans to adopt Microsoft rival Alphabet’s (GOOGL) Google Cloud service to meet its increasing computational power requirements, a move that has caused greater tensions between the two companies. Last year, Microsoft relinquished its observer seat on OpenAI’s board of directors to address antitrust concerns.

Is Microsoft a Long-Term Buy?

On TipRanks, MSFT stock has a Strong Buy consensus rating, based on 25 Buys and four Hold ratings. Also, the average Microsoft price target of $520.96 implies 8.7% upside from current levels. Year-to-date, MSFT stock has gained 14.1%.

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