The Competition and Markets Authority has launched a strategic market status investigation into Microsoft’s business software ecosystem.
Hundreds of thousands of UK businesses and public sector organisations use its software including Windows, Word, Excel, Teams and, increasingly, AI assistant Copilot.
An SMS designation, administered under the Digital Markets Competition Regime, would allow the CMA to act on a major concern from its 2025 cloud market investigation – Microsoft’s use of software licensing reducing competition in the cloud.
It says it would also provide a route to ensuring a level playing field among providers at a critical moment, as AI-driven innovation reshapes competition in productivity software.
The CMA added that, following engagement with Microsoft and Amazon, the tech giants have set out actions on cloud egress fees and interoperability to support greater choice for businesses and public sector organisations in the UK.
It claims these changes will reduce expense and effort for UK customers when using more than one cloud provider.
“We’re using the regime in a flexible, pragmatic way to deliver real impact, as quickly as possible, for UK customers,” said Sarah Cardell, chief executive of the CMA. “This announcement shows we’re not just responding to today’s concerns but getting ahead of emerging issues too.”
Mark Boost, CEO of London-based web hosting company Civo, described the decision to investigate Microsoft as encouraging but added: “The decision to exclude AWS raises practical concerns with both providers being structured in the same way from a structural lock-in perspective, which could create a regulatory imbalance between the two parties that would keep one side unchallenged.
“The current announcement does not provide adequate solutions to solve the serious issues surrounding the dominance of these key foreign-based hyperscalers. There needs to be a fair digital market in which domestic innovation is encouraged, alongside continuing to help build opportunities for international collaboration and trade.”
Paul Mackay, VP of AI & Cloud (EMEA) at Cloudera, a hybrid data and AI company, added: “The CMA’s proposed regulations should help remove some of the commercial barriers that have seen data trapped on a particular hyperscalers’ platform.
“However, that does not mean AI workloads and data can simply be lifted and shifted between environments. AI now sits at the heart of many critical business processes, whilst underlying technical challenges, including complex data ecosystems and dependence on cloud-specific tools, will still pose challenges.
“Any organisation assuming it can now move data and AI at will is in for a shock, as the reality is far more complex.”