The UK Competition and Markets Authority has proposed designating Microsoft with strategic market status in business software, opening a consultation on 16 October. Responses are due by 5pm UK time on 13 November 2026, with a final decision required by 13 February 2027.
The provisional assessment covers an interconnected software ecosystem spanning PC operating systems, productivity applications, security, server operating systems and relational databases. The CMA says customers face difficulties changing suppliers. Strategic market status does not establish wrongdoing, and the proposal does not itself impose new conduct rules.
A separate roadmap identifies possible work on cloud licensing, AI functions, communication and collaboration applications, and security software. It sets priorities for further evidence gathering rather than deciding which remedies to impose. Any intervention would depend on designation and further legal assessment.
For AI, the CMA wants to examine whether competing tools can integrate with Microsoft software and be discovered and used within it. Microsoft told the regulator that third-party AI providers can use public interfaces to obtain substantially the same access to organisational data as Copilot. The roadmap records competing providers' concerns about functional access and product visibility; these remain matters for investigation.
What strategic market status would change
Under the CMA's standing guidance, designation applies to a particular digital activity linked to the UK. A company must exceed £25 billion in global turnover or £1 billion in UK turnover. The authority must also establish substantial, entrenched market power and strategic significance. Size alone therefore does not settle the question.
The market-power assessment looks at least five years ahead, considering foreseeable developments as well as current conditions. A designation normally lasts five years. Before imposing conduct requirements, the CMA must consider which tool fits the problem and satisfy the applicable statutory conditions. Such requirements guide how a designated business behaves in the relevant activity.
The regime also permits pro-competition interventions to address an adverse effect on competition. These are separate decisions with their own assessment, rather than automatic consequences of a designation. For software customers and suppliers, the distinction is practical: the current consultation concerns whether Microsoft enters the regime, while specific obligations require further work.
Existing changes and the next cloud review
Microsoft has already changed its approach to Teams following European competition proceedings. In a September 2025 announcement, the company said revised licensing and pricing would apply globally from 1 November 2025. It described options to buy productivity suites with or without Teams, alongside resources intended to help other communication tools work with its applications.
The company also committed to interfaces for exporting Teams information and accessing customer data from services including Exchange Online and OneDrive. Its announcement distinguished worldwide product changes from additional guarantees for European Economic Area customers, including opportunities to move from bundled suites during multi-year contracts and corresponding percentage discounts. Those earlier commitments provide context for the UK review; they are not a response issued to Friday's proposal.
In a separate cloud-services progress report published on 16 October, the CMA says Amazon and Microsoft have lowered some barriers to moving between providers. Changes include contractual provisions for free data transfers when UK customers switch, reduced transfer charges for using several clouds and processes for requesting better interoperability.
Implementation also varies by connection. The report says Amazon's link with Google is already launched, while Microsoft's Google interconnection is expected to enter preview in coming months. It does not describe every provider pairing as operational.
The report is cautious about the results. Uptake of new schemes has been limited, some announced actions remain outstanding, and customers still report difficulties moving workloads. AI migration tools can reduce engineering effort, but customers must still address cloud-specific dependencies and check the security of generated code before deployment.
Next, the authority and providers will work on identity and access management across clouds and the portability of Kubernetes applications. The CMA says solutions and delivery timetables are not yet settled. Its board will review progress in spring 2027, including whether voluntary engagement is producing enough improvement for UK customers.
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