Alphabet’s (GOOGL) Google partnership with AI startup Anthropic has hit a potential roadblock in the U.K. The Competition and Markets Authority (CMA) has announced a formal investigation into Google’s $2 billion investment, raising concerns about its impact on market competition.
It should be noted that the CMA initiated its review of Google’s investment in July and has now escalated it to a formal merger inquiry. This signals a heightened level of scrutiny for the deal. Furthermore, the CMA has set a deadline of December 19 to determine if it will further expand the investigation.
In response to the probe, Google emphasized that Anthropic retains the freedom to choose cloud providers and that Google doesn’t demand exclusive access to the AI startup’s technology. Also, both GOOGL and Anthropic have expressed their intention to cooperate with the CMA and provide full details regarding the deal.
CMA Issues Contrasting Decisions
The CMA’s investigation into the Anthropic deal stands in sharp contrast to its recent decision on Amazon’s (AMZN) $4 billion investment in the same company. Despite Amazon’s larger deal size, the CMA approved it in late September, stating that Anthropic and Amazon’s combined market share in the U.K. isn’t large enough to require further scrutiny.
The regulator also cleared Microsoft’s (MSFT) partnership with AI startup Inflection AI last month.
In light of this, the CMA’s push for a deeper review of Google’s deal raises concerns about its potential impact on competition.
Is GOOGL Stock a Good Buy?
Turning to Wall Street, GOOGL has a Strong Buy consensus rating based on 22 Buys and seven Holds assigned in the last three months. At $200.37, the average Alphabet price target implies 23.14% upside potential. Shares of the company have gained 16.78% year-to-date.