Will Microsoft Face Antitrust Issues Over Its Cloud Unit?

MSFT stock - Will Microsoft Face Antitrust Issues Over Its Cloud Unit?

Source: NYCStock / Shutterstock.com

Microsoft (NASDAQ:MSFT) could be under some heat from European regulators in the future. The company has reportedly been in focus following a complaint about anti-competitive behavior involving its cloud unit, Azure. While Microsoft has largely been able to stay out of the antitrust spotlight over the last few years, MSFT stock may now be getting roped into that discussion.

Microsoft’s peers — like Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), Meta (NASDAQ:FB) and Amazon (NASDAQ:AMZN) — have come under antitrust scrutiny both here in the U.S. and in Europe. While Microsoft has been able to avoid the political chants calling for a breakup of big tech, this development now has the company inching toward inclusion with other big tech names.

The problem?

Microsoft is reportedly combining Office and Windows together to move customers away from other large cloud companies such as Google Cloud and Amazon Web Services. While this might not seem like a big deal, critics are comparing it to Microsoft’s antitrust issues from the early 2000s, when it used similar business practices.

Trying to get out ahead of things, Microsoft president Brad Smith commented on the issue, saying, “While not all of these claims are valid, some of them are, and we’ll absolutely make changes soon to address them.”

MSFT Stock Chart

Daily chart of MSFT stock
Click to Enlarge
Source: Chart courtesy of TrendSpider

When it comes to the chart, we’ll note that MSFT stock enjoyed a powerful rally off the March lows. At the same time though, what tech stock didn’t?

Shares couldn’t quite rally back to the 61.8% retracement of the overall correction, which is disappointing. But even more disappointing is the stock’s inability to hold its key moving averages. Worse, MSFT stock couldn’t hold the shorter-term 61.8% retracement on the downside (the red retracements).

Where does that leave us now? It’s quite possible we see an oversold bounce in tech. If that comes to fruition, the gap-fill level near $296.25 could be in play, along with the declining 10-day moving average.

Above that could put $300 and the 200-day moving average in play.

On the downside, though, keep an eye on this week’s low near $280.50. A break of this level could open the door down to the $270 to $275 zone and the rising 21-month moving average. If MSFT stock dips to this area, bulls can likely look for a bounce, even if it’s just for the short term.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/msft-stock-will-microsoft-face-antitrust-issues-over-its-cloud-unit/.

©2022 InvestorPlace Media, LLC