The UK’s Competition and Markets Authority (CMA) on October 16, 2026, proposed designating Microsoft with strategic market status (SMS) in its business software ecosystem, a step that would allow the regulator to consider interventions such as conduct requirements covering products from Word and Teams to Copilot. The CMA is consulting on the provisional decision until November 13 and faces a statutory deadline of February 13, 2027, for a final decision.

The proposal follows an investigation the CMA opened on May 14, 2026, under the UK’s digital markets competition regime, according to the case timeline. The regulator said Microsoft’s business software, which includes Word, Excel, Outlook, PowerPoint, Teams, Copilot and its security, server and operating system products, “is used by over a million businesses and public sector organisations across the UK, with around 20 million monthly users.”

What the CMA found

The investigation covered five areas: personal computer operating systems, productivity software suites, security software, server operating systems and relational database management systems. The CMA’s provisional view is that Microsoft holds a strong position in all five, and that this strength stems from barriers to customers switching, which weaken the constraint from rival developers. Commercial practices and integration advantages add barriers that rivals struggle to overcome, the regulator said.

According to The Register, the CMA found that bundled, discounted licensing discourages customers from adopting rival products, because switching would duplicate costs they already pay within their Microsoft bundle.

The CMA stressed that an SMS designation does not find or assume wrongdoing. If Microsoft is designated, the regulator could consider targeted interventions, such as conduct requirements, subject to the relevant legal tests.

Where the CMA might act

Alongside the proposed decision, the CMA published an indicative roadmap of areas it would prioritize if Microsoft is designated:

  • whether customers can freely choose AI tools, and whether rival AI providers can compete fairly with Copilot;
  • whether Microsoft’s bundling and integration of security products limits customer choice;
  • whether customers have effective choice over which cloud hosts their software licenses, and how Microsoft’s licensing practices affect that choice.

The release also referred to bundling more broadly and to making it easier for developers to integrate with Microsoft’s ecosystem. “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,” said Sarah Cardell, the CMA’s chief executive.

Microsoft’s response

Microsoft told The Register that it does not share the CMA’s views in the proposed decision. “All our products – including Copilot – are open and interoperable,” a spokesperson said, adding that this gives customers “the ability to use them alongside competing services.” The spokesperson said: “We will continue engaging constructively to ensure UK customers and businesses carry on benefiting from robust competition.”

Cloud: no designation, more work

The CMA also gave an update on cloud services, where it is working with Amazon Web Services (AWS) and Microsoft outside a formal designation process while keeping a full SMS investigation under review. It said its work had driven developments from both companies, including connecting their data centers with rivals, beginning with Google; completely removing data transfer fees for customers changing cloud providers and reducing them for customers using more than one provider; a new mechanism for competitors and customers to request greater interoperability; and AI tools to automate the technical steps required to switch.

Further work will focus on identity and access management across cloud providers and on portable cloud architectures, with another update due in spring 2027. “Meaningful improvements have already been made, with more to come,” Cardell said.

Why it matters

For UK organizations that buy Microsoft software, nothing changes yet: the decision is provisional, and any conduct requirements would follow only after a final designation and further process. The roadmap, however, shows the issues the regulator considers most pressing: choice of AI assistants, the bundling of security products and where software licenses can be run in the cloud.

The consultation page invites responses from anyone through the CMA’s online portal or by email. It notes that any non-disclosure agreement with Microsoft should not prevent a party from responding, and that Microsoft has confirmed it will not use confidentiality provisions to stop anyone doing so. The Register noted that the US Federal Trade Commission and the European Commission are considering similar action.

What to watch

The consultation closes at 5pm on November 13, 2026. The CMA’s indicative timetable has non-confidential responses published in November, when Microsoft may also make oral representations, followed by further evidence gathering and a final decision report in February 2027, ahead of the February 13 statutory deadline.

The caveats

The CMA’s findings are provisional and subject to consultation, and the roadmap lists areas for possible intervention rather than decided remedies. The quoted Microsoft statement was given to The Register and does not appear in the CMA’s published materials.

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