Tensions Between Microsoft (MSFT) and OpenAI Reach ‘Boiling Point’

According to media reports, tensions between Microsoft (MSFT) and privately held OpenAI have reached a “boiling point” and threaten to spill over into the U.S. courts.

The Wall Street Journal was the first to report 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 pumped $14 billion into the start-up company behind ChatGPT and other artificial intelligence (AI) technologies.

In recent years, the relationship between Microsoft and OpenAI has soured to the point where OpenAI is now considering seeking a federal regulatory review of the terms of its contract with Microsoft for potential violations of antitrust laws, as well as a public campaign to discredit the technology giant.

Bad Blood

Such a move on the part of OpenAI would severely damage one of the most important technology partnerships in the AI field, and might even end the relationship between the two companies altogether. Analysts seem to agree that the partnership benefitted both Microsoft and OpenAI in recent years as they raced to the head of the AI technology pack.

But now, OpenAI appears to be looking for ways to reduce its reliance on Microsoft. OpenAI has announced plans to adopt Microsoft rival Alphabet’s (GOOGL) Google Cloud service to meet its growing needs for computing capacity, causing tensions between the companies to intensify. Last year, Microsoft gave up its observer seat on OpenAI’s board of directors to address antitrust concerns.

Is MSFT Stock a Buy?

Microsoft’s stock has a consensus Strong Buy rating among 36 Wall Street analysts. That rating is based on 31 Buy and five Hold recommendations issued in the last three months. The average price target on MSFT stock of $518.77 implies 9.22% upside from current levels.

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