Microsoft could face new competition requirements in Britain after the Competition and Markets Authority proposed bringing its business software operations under the country’s enhanced digital markets oversight. The proposal would allow the regulator to consider targeted rules affecting how Microsoft sells its products and connects them with competing services, including artificial intelligence tools.
The CMA announced on Oct. 16 that it was considering designating Microsoft as having strategic market status in business software. Its examination covers concerns about customers’ ability to change suppliers, combine products from different companies and adopt alternatives to services embedded in Microsoft’s software ecosystem.
The proposal follows an investigation launched in May into a business software operation serving approximately 20 million users each month in Britain. Microsoft’s position spans operating systems, productivity applications, cybersecurity products, and software for managing servers and databases, giving the investigation a scope extending beyond any single application.
A strategic market status designation would not itself mean that Microsoft had broken competition law. Instead, it would bring the designated activity within a framework that permits tailored conduct requirements to address competition concerns. The proposal is preliminary, and any specific restrictions would require further regulatory consideration.
One focus is whether businesses face obstacles when replacing Microsoft products or connecting rival services to their existing systems. For organizations that rely on interconnected applications, changing one supplier can involve changes elsewhere in their technology infrastructure. The CMA is considering whether measures to improve compatibility and ease switching could give customers more practical alternatives.
Microsoft’s expansion of Copilot across its workplace applications adds an AI dimension to that assessment. The regulator intends to examine whether competing AI developers can reach business customers on fair terms as Microsoft integrates its own assistant into products that organizations already use. The review could affect packaging and sales practices involving applications such as Excel and Teams as well as Copilot.
The scrutiny also encompasses the combination of cybersecurity tools with other Microsoft products and whether those arrangements discourage customers from choosing independent security providers. Separately, the regulator is examining how Microsoft’s software licensing terms affect businesses that want to run their systems on competing cloud infrastructure.
Microsoft disputed the CMA’s preliminary assessment. The company said its products, including Copilot, support competing technologies and enable customers to use services from multiple suppliers.
Alongside the software proposal, the CMA provided an update on cloud computing competition. It acknowledged steps by Microsoft and Amazon Web Services to reduce barriers to moving workloads or using multiple cloud providers, including better connections between rival networks and the removal of some transfer charges for customers switching services.
The regulator nevertheless said further improvements were needed. It plans to continue discussions with both companies while preserving the option of a formal investigation using its digital markets powers. Microsoft welcomed the CMA’s recognition that its cloud position did not warrant a strategic market status designation, while AWS highlighted its investments in AI, multicloud technology and open standards.
The Microsoft software consultation forms part of the wider implementation of Britain’s digital competition regime. Google and Apple received strategic market status designations in October 2025, covering Google’s search and mobile platform activities and Apple’s mobile platform activities.
The CMA is seeking responses from Microsoft, other businesses and interested parties by Nov. 13, 2026. A final decision on the proposed software designation is expected in February 2027.
Sources: PYMNTS.com