Microsoft's Bold AI Gamble: $80 Billion Bet Amidst FTC Scrutiny and Rising Consumer Costs

As of last week, Microsoft (MSFT) experienced a rise of 1.05%. Over the past week, the increase was 2.41%, and year-to-date, it has seen a 1.79% rise. The company's latest market valuation stands at $3.1897 trillion. These figures highlight a resilient performance in a complex economic landscape, driven by diligent strategies and evolution in the tech sector.

Recently, concerns have been raised regarding Microsoft's substantial $13 billion investment in OpenAI, as reported by the U.S. Federal Trade Commission (FTC). The worry is that this could extend Microsoft's dominance in cloud computing into the emerging artificial intelligence market.

The alliance with OpenAI has led to speculations about the potential risks of major tech companies acquiring smaller AI developers. The FTC noted how large tech companies, including Microsoft, require AI startups to channel a portion of their investments into the giants' own products and services, which could centralize AI expertise and data, thereby compromising market competition.

FTC Chair Lina Khan emphasized that the practice by these tech companies to lock markets through collaborations may rob startups of crucial resources and disclose sensitive information, potentially hindering fair competition. There's also mention of some technology firms obtaining confidential financial information through collaborations with AI startups, which could further entrench the positions of these tech giants.

Microsoft has also committed to a significant increase in capital expenditure in AI infrastructure. The company announced a plan to invest $80 billion in building AI datasets and deploying AI and cloud-based applications globally by fiscal 2025, as reported in their official blog post in January 2025. This move is in line with the broader industry trend of increasing investment in generative AI and massive language models.

In the consumer space, Microsoft has introduced AI capabilities into its Microsoft 365 suite, marking the first increase in subscription pricing since its launch. Integrating the Copilot AI assistant into applications like Word and Excel, Microsoft aims to enhance user experience while reflecting on the new features and benefits added over the years.

Vice President of Microsoft 365 Consumer Products, Bryan Rognier, noted that subscription prices will see an increase, acknowledging the additions made to the service over the last 12 years. Notably, existing subscribers can switch to plans without AI capabilities if preferred, although new innovations will require upgraded subscriptions.

Additionally, Microsoft is renaming its enterprise-focused chatbot product to Microsoft 365 Copilot Chat to improve visibility and encourage enterprise adoption. The rebranding effort aims to familiarize businesses with AI agents, which are becoming an integral part of Microsoft's offering and are designed to enhance operational efficiency, although the capabilities come with associated costs.

In a move to streamline operations, Microsoft plans to pause hiring within certain U.S. consulting services as part of cost-cutting measures. The internal memo cited a freeze on hiring that will extend through the remainder of the fiscal year, ending in June. Moreover, the company plans to reduce marketing expenses and external resource spending.