Microsoft’s AI Ambitions Face Legal Challenge in UK Court

Microsoft US5949181045

Microsoft finds itself navigating a dual narrative of technological advancement and legal contention. As the company pushes forward with significant upgrades to its artificial intelligence offerings, it must simultaneously address a substantial class action lawsuit in the United Kingdom. The tech giant's shares concluded Friday's trading session at $478.37, marking a decline of approximately one percent.

A hearing is currently underway at the London Competition Appeal Tribunal that poses a potential threat to Microsoft. The case, spearheaded by competition lawyer Maria Luisa Stasi, represents nearly 60,000 UK businesses. The plaintiffs allege that Microsoft engaged in anti-competitive conduct by artificially inflating the cost of running its Windows Server software on rival cloud platforms, including AWS, Google Cloud, and Alibaba Cloud.

The core accusation is that Microsoft imposed higher fees and degraded the user experience for customers who chose not to use its own Azure cloud infrastructure. The lawsuit, valued at $2.8 billion, describes these actions as part of a "coherent abusive strategy" designed to leverage the company's market dominance.

Microsoft has formally rejected these claims. The company maintains that its vertically integrated business model can be beneficial for competition, arguing that the cloud market remains highly dynamic and fiercely contested.

Accelerating the AI Roadmap with GPT-5.2

On the innovation front, Microsoft announced on December 11 the immediate availability of OpenAI's GPT-5.2 model within its Microsoft 365 Copilot and Copilot Studio platforms. This rollout represents the next phase in the company's AI integration strategy.

The new GPT-5.2 deployment introduces two specialized variants: one for complex, strategic thinking tasks and another optimized for instant, routine operations. Key features of this integration include:

• Work IQ: A system designed to create connections between meeting notes, emails, and documents.
• Model Choice: Users are granted the flexibility to select between different AI models based on their needs.
• Seamless Transition: Automatic migration for existing agents currently operating on the older GPT-5.1 version.
• Phased Rollout: A gradual release schedule to all customers holding Copilot licenses.

Adoption metrics underscore the strategy's momentum. More than 70% of Fortune 500 companies are now utilizing Microsoft 365 Copilot, with the broader Copilot family attracting 150 million monthly users. The company's AI-related revenue is currently on an annualized run rate exceeding $10 billion.

Subscription Price Adjustments Announced

In a separate business update, Microsoft disclosed plans to increase pricing for its commercial Microsoft 365 subscriptions, effective July 1, 2026. The company cites the addition of enhanced AI, security, and management capabilities as justification for the move. Existing customers will see higher costs upon their first renewal after the specified date.

Wall Street Maintains a Bullish Stance

Despite the looming legal uncertainty, analyst sentiment on Wall Street remains predominantly positive. Of the 34 market experts covering the stock, 32 currently advocate a "buy" position, while two recommend holding. The consensus price target stands at $632.22, suggesting a potential upside of roughly 32% from current levels. Microsoft's market capitalization is approximately $3.56 trillion.

The coming weeks will reveal whether the financial and strategic momentum from Microsoft's AI offensive can outweigh the burdens of its legal challenges, or if the London case will apply a tangible brake on its progress.