Overview
The Competition and Markets Authority (CMA) in Britain has announced it will launch a Strategic Market Status (SMS) investigation in May to assess whether Microsoft dominates key business software markets. The inquiry could lead to legally mandated conduct requirements or pro-competition measures that would affect licensing terms used by Microsoft across hundreds of thousands of UK businesses and public sector organisations.
Regulatory decision and scope
The CMA board, which met on March 25 to set its next work programme, decided to use powers created under the UK’s Digital Markets Competition Regime to commence the SMS probe into Microsoft’s business software ecosystem. The investigation will examine a range of products identified by the regulator, including Windows, Word, Excel, Teams and Copilot.
The SMS designation process can take up to nine months. If the CMA issues an SMS designation, it would open the door to imposing conduct obligations or other interventions on Microsoft, subject to separate legal procedures.
Regulator rationale
The CMA said the rapid integration of artificial intelligence into workplace tools - including agentic technologies - has made this a critical moment for scrutiny. Products such as Microsoft Copilot, Enterprise GPT and Claude Enterprise are already in widespread use, the regulator noted, and their embedding in routine business software has implications for UK productivity and competitiveness.
"We’re not just responding to today’s concerns but getting ahead of emerging issues too," said CMA Chief Executive Sarah Cardell.
Background from cloud market inquiry
A main factor behind the SMS decision was the CMA’s assessment that Microsoft has not made material progress on licensing concerns since the conclusion of its cloud market investigation in July 2025. That earlier probe found that Amazon Web Services and Microsoft each account for up to 40% of UK customer spend on cloud services, identifying both firms as holding significant market power.
Industry commitments and CMA response
Separately, the CMA said Microsoft and Amazon have taken steps aimed at easing switching and improving interoperability. Both companies committed to removing cloud egress fees from UK customer contracts for a switching period of at least 180 days. They also plan to introduce new products that will directly connect their datacentres to each other and to Google Cloud Platform. Microsoft has said it will make the necessary contractual changes within two months.
The CMA cautioned, however, that the practical effectiveness of these measures remains uncertain and that further action may be required.
International context and next steps
The UK action places it alongside other jurisdictions conducting related scrutiny. Brazil’s CADE has opened an investigation into Microsoft’s corporate software and cloud conduct, and Japan’s JFTC is probing whether Microsoft Azure limits customers and competitors from combining services across providers.
CMA Chair Doug Gurr recused himself from the board’s decision on the matter. The regulator said it will publish the scope of the SMS investigation and an invitation to comment when the probe formally begins in May.
Implications for organisations and markets
Businesses, public sector procurement teams and cloud service purchasers will be watching the CMA’s actions closely, as any mandated changes to licensing or interoperability could affect software costs, procurement flexibility and vendor switchability across the UK market.