UK CMA escalates scrutiny of Microsoft

On 16 October 2026, the UK Competition and Markets Authority (CMA) set out a proposed decision to designate Microsoft with strategic market status in its business software ecosystem. The move reflects the regulator’s provisional view that Microsoft holds a strong position across key areas of digital activity that underpin business IT usage in the UK.

The proposed designation focuses on five segments: personal computer operating systems, productivity software suites, security software, server operating systems and relational database management systems. The CMA’s assessment is that Microsoft has a strong position across each of these categories, shaping how businesses access and use software and related digital services.

Strategic market status would give the regulator a dedicated framework for oversight of Microsoft’s conduct in these activities. The proposal is part of a broader effort to address perceived competition risks in markets that are central to enterprise technology and digital infrastructure.

If the designation is confirmed, the CMA said it could consider targeted interventions in several areas of Microsoft’s business practices. These include product bundling, particularly where software is sold in packages that may affect customer choice among productivity or security tools.

The regulator highlighted the use of AI productivity tools, including Copilot, as a potential focus of oversight. It is considering whether bundling or integration could influence customers’ ability to select AI tools or combine them with competing services. Security software bundling is another area where future conduct requirements may be explored.

Cloud‑related licensing practices are also under scrutiny. The CMA flagged how licensing could affect where customers deploy Microsoft software in the cloud, including the ease of using different cloud providers. The regulator signalled that the proposed designation would allow it to examine such practices in more detail and, if needed, impose tailored obligations.

The CMA has opened a public consultation on the proposed strategic market status decision, with responses due by 13 November 2026. The consultation is intended to gather views from customers, rivals and other interested parties on both the assessment and potential areas for intervention.

Under its statutory timetable, the authority must reach a final decision on Microsoft’s designation by 13 February 2027. Any eventual obligations would be shaped following the consultation and further evidence gathering, within the scope of the five business software areas identified by the CMA.

Alongside the business software proposal, the CMA issued an update on its monitoring of cloud services involving Microsoft and Amazon Web Services (AWS). It stated that both providers have taken material steps to promote customer choice in cloud services.

Despite these steps, the regulator concluded that barriers to switching between providers and to adopting multi‑cloud arrangements still persist. It said further work is required to address these obstacles and indicated that it will continue engagement with the companies while keeping the option of formal cloud‑sector measures under review.

Microsoft has publicly disagreed with the CMA’s views set out in the proposed strategic market status decision. The company stated that it does not share the regulator’s assessment of its position and practices in business software and cloud‑related markets.

Microsoft maintains that its products, including the Copilot AI tool, are open and interoperable. It says these services can be used alongside competing offerings, emphasising compatibility with other providers even as the CMA examines potential impacts on customer choice.