Barclays believes the investments Microsoft (MSFT) has made in advertising warrant a new look, particularly amid the backdrop of ongoing antitrust action in both the U.S and Europe, and as a result of industry changes from artificial intelligence. The firm sees the potential for a $50B advertising asset over time for Microsoft. The company has revamped its search offering with new generative AI features, and the ongoing antitrust case pertaining to Google’s (GOOG, GOOGL) dominance in search has stirred conversation around a potentially greater opportunity for Microsoft to compete, the analyst tells investors in a research note. The firm believes Microsoft could solidify itself as a long-term challenger to the existing advertising incumbents across the broader tech universe. Barclays thinks Microsoft has the ability to compete at greater scale, particularly if Google is forced to change its practices post its case versus the Department of Justice. The firm believes the total value of Microsoft’s advertising business is $30B organically driven primarily by LinkedIn and Bing, with the potential for a $20B benefit to sales as a result of the company paying up for distribution, “should Microsoft choose to be more aggressive here.”
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