After The EU, Microsoft Faces Cloud Computing Antitrust Scrutiny in South Africa
Portfolio Pulse from Anusuya Lahiri
Microsoft Corp (NASDAQ:MSFT) is under antitrust investigation in South Africa for its cloud computing licensing practices, similar to an ongoing EU case. The EU investigation, prompted by complaints from CISPE and other cloud providers, focuses on Microsoft's licensing terms potentially harming Europe's cloud ecosystem. Microsoft is negotiating with CISPE to avoid an EU investigation that could lead to fines and operational changes. The EU is also examining Microsoft's investment in OpenAI and complaints about Microsoft Teams. Microsoft plans to sell Teams separately from its Office suite globally in response to an EU investigation. MSFT stock has gained 47% in the last 12 months, and exposure to MSFT can be gained through SPDR Select Sector Fund – Technology (NYSE:XLK) and Fidelity MSCI Information Technology Index ETF (NYSE:FTEC).
April 05, 2024 | 11:03 am
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NEGATIVE IMPACT
Fidelity MSCI Information Technology Index ETF (NYSE:FTEC) provides exposure to Microsoft. MSFT's antitrust issues could impact FTEC's performance.
FTEC, which includes Microsoft in its holdings, could see its value affected by the legal and regulatory challenges MSFT is facing. The antitrust investigations could lead to negative sentiment towards MSFT, indirectly affecting FTEC's stock price.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
Microsoft is under antitrust investigation in South Africa and the EU, which could lead to fines and operational changes. The company is negotiating to avoid a detailed EU investigation.
The antitrust investigations in South Africa and the EU pose significant legal and operational risks to Microsoft, potentially leading to fines and required changes to its cloud licensing practices. These factors are likely to create uncertainty among investors, negatively impacting MSFT's stock price in the short term.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
NEGATIVE IMPACT
SPDR Select Sector Fund – Technology (NYSE:XLK) offers exposure to Microsoft, which is currently facing antitrust investigations. MSFT's performance can influence XLK's value.
Given that XLK includes Microsoft as part of its portfolio, the ETF's value may be negatively affected by the antitrust investigations facing Microsoft. The uncertainty and potential operational changes for MSFT could lead to volatility in XLK's performance.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
Amazon.com Inc (NASDAQ:AMZN), as a member of CISPE, is involved in the complaint against Microsoft's cloud licensing practices in the EU.
While Amazon is involved in the complaint against Microsoft's cloud licensing practices through its membership in CISPE, the direct impact on AMZN's stock price is less clear. The outcome of the investigation may affect the competitive landscape in cloud computing, but the immediate financial impact on Amazon is uncertain.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50