Britain’s competition watchdog wants to designate Microsoft as having strategic market status in its business software ecosystem. The proposal, announced on 16 October, could pave the way for interventions covering the choice of AI tools, security software and cloud services. It remains subject to consultation, however: it is neither a final decision nor a new set of obligations for the company.
The Competition and Markets Authority (CMA), the UK’s competition regulator, says Microsoft’s business software is used by more than a million businesses and public sector organisations across the country, with around 20 million monthly users. Access to these products, and the ability to choose alternative suppliers, therefore matter to a large share of UK workplaces.
What concerns has the regulator raised?
The CMA’s provisional findings identify Microsoft’s strong position in five areas: personal computer operating systems, productivity suites, security software, server operating systems and relational database management systems.
According to the regulator, barriers to switching suppliers, commercial practices and advantages arising from product integration restrict customer choice and other companies’ ability to compete. For organisations using several connected tools, the issue is therefore not simply what an individual programme offers, but whether some services can be replaced with competitors’ alternatives.
The CMA is proposing to designate Microsoft as having strategic market status (SMS) in this ecosystem. It stresses that such a designation does not amount to a finding of wrongdoing. The provisional findings are open to consultation, with a final decision due before the statutory deadline in February 2027.
AI, security and cloud choice
The regulator has also published an indicative plan for gathering further evidence and considering possible interventions if Microsoft receives SMS designation. One area is customers’ freedom to choose artificial intelligence tools and the conditions under which other companies can compete with Copilot.
The plan also covers the bundling and integration of security products, as well as the effect of licensing terms on customers’ choice of cloud services for running software. These are not binding requirements already in force. Any intervention would require further findings and the relevant legal conditions to be met. Greater choice, stronger competition and lower prices remain potential benefits identified by the regulator, rather than guaranteed outcomes.
In a separate update, the CMA reported progress in its work with AWS and Microsoft to make it easier to switch cloud providers and use several providers’ services at the same time. It also noted that barriers remain. That work is taking place outside the formal SMS designation process and should not be confused with the proposal concerning Microsoft’s business software ecosystem.
