CMA proposes special status for Microsoft business software

What the CMA proposes

The Competition and Markets Authority said on 16 October 2026 that it proposes to designate Microsoft with strategic market status in its business software ecosystem, and will consult before deciding. The CMA says the products covered include Word, Excel, Outlook, PowerPoint, Teams and Copilot, as well as Microsoft's security, server and operating system products. According to the CMA, those products are used by over a million UK businesses and public sector organisations, with around 20 million monthly users. The CMA says strategic market status designation does not assume wrongdoing. If Microsoft is designated, the CMA could impose conduct requirements or pro-competition interventions. The CMA will consult before deciding whether to designate.

The CMA frames the proposed designation as a step that would give it a formal framework for monitoring and, if needed, regulating how Microsoft's business software ecosystem operates in the UK. The CMA says the scale of use across UK organisations is central to its assessment. The CMA says the products span productivity, security, server and operating system categories. The CMA says the consultation will allow interested parties to respond before any final decision. The CMA says the final designation decision is due by the statutory deadline in February 2027. The CMA says it will publish a further update in spring 2027.

What it investigated

The CMA investigated five areas: personal computer operating systems, productivity software suites, security software, server operating systems and relational database management systems. The CMA says those five areas formed the basis of its examination of Microsoft's business software ecosystem. The CMA says the investigation covered both the products themselves and the way they are supplied to UK organisations. The CMA says the findings from those areas inform its proposal to designate Microsoft with strategic market status. The CMA says the proposed designation relates to the business software ecosystem as a whole rather than to a single product. The CMA says the consultation will test its provisional view across those five areas.

The CMA says the five areas are connected because organisations typically buy and use them together. The CMA says personal computer operating systems and productivity software suites are among the most widely deployed categories in UK workplaces. The CMA says security software, server operating systems and relational database management systems support the infrastructure on which those workplaces depend. The CMA says its investigation considered how Microsoft's presence across those categories affects UK customers. The CMA says the evidence gathered in those areas underpins its proposal to consult on designation. The CMA says no final decision has been made.

Possible interventions

The CMA published an indicative roadmap of possible interventions. The CMA says areas it will look at include whether customers can freely choose AI tools and whether rival AI providers can compete fairly with Copilot. The CMA says it will also examine whether Microsoft's bundling of security products limits choice. The CMA says the roadmap is indicative and does not represent a final set of remedies. The CMA says the possible interventions would apply only if Microsoft is designated. The CMA says the consultation will cover the scope of any conduct requirements or pro-competition interventions.

The CMA says the AI related questions focus on customer choice and on the ability of rival providers to compete with Copilot. The CMA says the security questions focus on whether bundling limits choice for UK organisations. The CMA says the roadmap sets out the areas it intends to examine rather than conclusions it has reached. The CMA says the indicative roadmap is published alongside its proposal to consult on designation. The CMA says the consultation will allow Microsoft and other parties to respond to the areas identified.

Cloud licensing and interoperability

The CMA says it will look at whether customers have effective choice over which cloud hosts their software licences, how Microsoft's licensing practices affect that, how Microsoft bundles its software, and whether developers can integrate their products with its ecosystem more easily. The CMA says those questions form part of the possible interventions set out in its indicative roadmap. The CMA says the licensing questions concern the practical ability of UK organisations to move or place their software licences with the cloud host of their choice. The CMA says the interoperability questions concern the ease with which developers can integrate their products with Microsoft's ecosystem. The CMA says the bundling questions concern how Microsoft packages its software for customers. The CMA says the consultation will examine those areas in more detail.

The CMA says the cloud licensing and interoperability questions are linked to the wider assessment of Microsoft's business software ecosystem. The CMA says effective choice over cloud hosting is relevant to how UK organisations use their licences. The CMA says Microsoft's licensing practices are among the factors it will examine. The CMA says the ability of developers to integrate their products with the ecosystem is a separate area of interest. The CMA says the indicative roadmap does not prejudge the outcome of the consultation.

Cloud switching changes

In a related cloud services update covering AWS and Microsoft, the CMA listed steps including removing data transfer fees for customers switching cloud provider, reducing them for multi-cloud use, connecting data centres with rivals starting with Google, and a new route for competitors and customers to request greater interoperability. The CMA says those steps form part of its related work on cloud services. The CMA says the removal of data transfer fees applies to customers switching cloud provider. The CMA says the reduction of those fees applies to multi-cloud use. The CMA says the connection of data centres with rivals will start with Google. The CMA says a new route will allow competitors and customers to request greater interoperability.

The CMA says the cloud services update covers AWS and Microsoft. The CMA says the listed steps are separate from, but related to, its proposal to consult on designating Microsoft with strategic market status. The CMA says the data transfer fee changes are intended to address switching between cloud providers. The CMA says the multi-cloud reduction is intended to address organisations that use more than one cloud provider. The CMA says the data centre connection step begins with Google. The CMA says the interoperability route is open to both competitors and customers.

Timeline

The final designation decision is due by the statutory deadline in February 2027, and the CMA will publish a further update in spring 2027. The CMA says the consultation on its proposal will take place before any final decision. The CMA says the February 2027 deadline is set by statute. The CMA says the spring 2027 update will follow the final designation decision. The CMA says the consultation will allow Microsoft and other interested parties to respond to the proposal. The CMA says the indicative roadmap of possible interventions is published alongside the consultation proposal.

Sarah Cardell, Chief Executive of the CMA, said: The evidence shows Microsoft has a long-standing and significant presence in the UK's business software market. The CMA says the consultation process will inform whether designation is confirmed. The CMA says the further update in spring 2027 will set out the next steps. The CMA says the proposed designation covers Microsoft's business software ecosystem. The CMA says the consultation will run before the final decision is taken.

Source: CMA: first steps to ensure choice in business software.

Related coverage on Kael Tripton: Xero vs Sage UK: Cloud Accounting Compared, UK Regulators to Oversee AWS, Google Cloud, Microsoft and Oracle, CMA fines Wayfair, Appliances Direct and Gold's Gym £6m, Fake discounts and countdown timers: the CMA rules, Buying or selling a small business in the UK: tax, TUPE, insurance and the due diligence checklist.

Frequently asked questions

What did the CMA announce on 16 October 2026?

The CMA said it proposes to designate Microsoft with strategic market status in its business software ecosystem, and will consult before deciding.

Which products are covered by the proposed designation?

The CMA says the products covered include Word, Excel, Outlook, PowerPoint, Teams and Copilot, as well as Microsoft's security, server and operating system products.

How many UK organisations and users does the CMA say use Microsoft's products?

The CMA says Microsoft's products are used by over a million UK businesses and public sector organisations, with around 20 million monthly users.

Does strategic market status designation assume wrongdoing?

The CMA says strategic market status designation does not assume wrongdoing.

What could the CMA do if Microsoft is designated?

The CMA says that if Microsoft is designated, it could impose conduct requirements or pro-competition interventions.