Key Points
- CMA proposes strategic market status designation for Microsoft in business software
- Regulator to examine whether bundling limits choice of AI tools including Copilot
- Final decision on designation expected by February 2027
Britain’s Competition and Markets Authority (CMA) has proposed designating Microsoft with ‘strategic market status’ in business software, a move that could lead to regulatory interventions in how the company bundles products such as Excel, Teams and its Copilot artificial intelligence assistant.
The CMA launched an investigation in May into whether Microsoft’s position in software used by around 20 million people monthly in Britain was uncompetitive. The regulator said on Friday (16 October) that it had found Microsoft held a strong position in personal computer operating systems and productivity, security, server and database management software. The CMA noted these positions were reinforced by barriers customers faced when switching providers.
Strategic market status is a designation under Britain’s Digital Markets Competition Regime that empowers the CMA to impose conduct requirements on technology companies deemed to hold entrenched market positions. Companies receiving this designation face ongoing regulatory scrutiny and potential interventions if the regulator determines their practices harm competition or limit consumer choice.
A Microsoft spokesperson said the company 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.
AI competition concerns
The CMA said it would investigate whether customers could freely choose AI tools and whether rivals could compete with Copilot, Microsoft’s generative AI assistant integrated across its Office productivity suite. The regulator will also examine whether Microsoft’s bundling of security products limited choice and how its licensing practices affected customers’ cloud computing options.
CMA CEO Sarah Cardell, said business software and cloud services underpinned workplaces across Britain, from small firms to vital public services.
“Organisations should be able to choose the products that work best for them, switch provider when they want to and combine services from different suppliers,” Cardell said. “We want to ensure businesses have the freedom to choose how they use Microsoft’s products alongside alternatives.”
By the numbers
Key figures from this story- 20 million
- Monthly users of Microsoft software in Britain
- February 2027
- Deadline for CMA final designation decision
The regulator will invite views on the proposed designation and will then make a final decision by February. If designated, Microsoft would become the third company subject to Britain’s digital market powers. Alphabet-owned Google was designated in online search, while Google and Apple were designated in mobile platforms in October 2025.
In June, the CMA imposed new conduct requirements on Google’s search services, including allowing publishers to stop their content being used to power the company’s AI features and requiring greater transparency over how its search rankings work.
The CMA also said on Friday that Amazon Web Services (AWS) and Microsoft needed to address remaining barriers to switching between cloud providers and using multiple cloud services. Both companies had taken steps to support greater choice, including connecting their data centres with rivals starting with Google and removing data transfer fees for customers switching providers. However, the CMA said more could be done.
The regulator said it would continue working with the companies while keeping the possibility of launching a formal investigation into the cloud sector under review.
“We welcome the CMA’s acknowledgement that Microsoft’s market position in cloud does not justify a Digital Markets Competition Regime designation,” a Microsoft spokesperson said.
AWS said it also welcomed the update. “We’ve continued to invest throughout 2026 in new AI, multicloud and open-standard capabilities that give customers more control over how they build and operate,” AWS said.
Your Questions, Answered
What is strategic market status under UK law?
Strategic market status is a designation under Britain's Digital Markets Competition Regime that empowers the CMA to impose conduct requirements on technology companies deemed to hold entrenched market positions, enabling ongoing regulatory scrutiny.
Which Microsoft products are under CMA scrutiny?
The CMA is examining Microsoft's bundling of Excel, Teams, security products and its Copilot AI assistant, along with licensing practices affecting cloud computing options.
When will the CMA make a final decision on Microsoft?
The CMA will invite views on the proposed designation and make a final decision by February 2027.
Which other companies have received strategic market status in Britain?
Google was designated in online search, while Google and Apple were designated in mobile platforms in October 2025, making them subject to Britain's digital market powers.
