UK regulator targets Microsoft’s business software over competition concerns
The UK’s Competition and Markets Authority (CMA) has proposed designating Microsoft with “Strategic Market Status” (SMS) regarding its business software ecosystem, marking a major escalation in regulatory oversight.
Microsoft’s 5 core software under probe:
The regulator identified strong positions across five core areas—PC operating systems, office productivity software, security software, server operating systems, and relational database management systems—reinforced by high switching costs for roughly 20 million UK monthly users.
On Friday, the regulator said it had found that Microsoft had a strong position in personal computer operating systems and productivity, security, server and database management software, reinforced by barriers customers faced when switching.
A Microsoft spokesperson said it did not share the CMA’s view.
“All our products including Copilot are open and interoperable, giving customers the ability to use them alongside competing services,” the spokesperson said.
CMA Chief Executive Sarah Cardell said business software and cloud services underpinned workplaces across Britain, from small firms to vital public services.
“Organizations should be able to choose the products that work best for them, switch provider when they want to and combine services from different suppliers,” said Sarah.
“We want to ensure businesses have the freedom to choose how they use Microsoft’s products alongside alternatives,” she added.
AI Competition:
The CMA said it would investigate whether customers could freely choose AI tools and whether rivals could compete with Copilot.
It would also examine whether Microsoft’s bundling of security products limited choice and how its licensing practices affected customers’ cloud options.
As reported, the investigation is closely scrutinizing Microsoft’s product-bundling practices (including how tools like Excel, Teams, and the Copilot AI assistant are packaged) alongside security software bundling and cloud licensing rules that can lock customers in and restrict third-party competition.
A public consultation will run through mid-November, with a final decision expected by February 2027.
If confirmed, Microsoft will become the third tech giant subject to Britain’s new digital market powers, following Google and Apple.
In response, Microsoft has pushed back against the decision, maintaining that its products remain open and interoperable.
