UK competition regulator proposes strategic market status for Microsoft business software

On October 16, 2026, the UK Competition and Markets Authority proposed designating Microsoft with strategic market status over its business software, which serves 20 million monthly users in Britain. The regulator raised concerns over switching barriers, software licensing, and product bundling involving Excel, Teams, and Copilot AI. Microsoft rejected the findings, arguing its products remain interoperable, but welcomed the exclusion of its cloud services.

Proposed strategic market status for Microsoft

• ▪On October 16, 2026, the UK Competition and Markets Authority proposed designating Microsoft with strategic market status in business software, with a final decision expected by February
• ▪If designated with strategic market status by the UK regulator, Microsoft would become the third company subject to Britain's digital market powers, following Google and Apple

Findings on Microsoft's market dominance

• ▪The UK Competition and Markets Authority found Microsoft holds a strong position across personal computer operating systems and productivity, security, server, and database management software
• ▪The UK Competition and Markets Authority stated that Microsoft's strong market position in business software used by 20 million British people monthly is reinforced by customer switching barriers

Potential regulatory powers over software bundling

• ▪Strategic market designation would give the UK Competition and Markets Authority powers to intervene in how Microsoft bundles products such as Excel, Teams, and security software
• ▪The UK Competition and Markets Authority is examining how Microsoft's software licensing practices affect customers' cloud options and whether security bundling limits product choices

Investigation into Copilot and artificial intelligence

• ▪The UK Competition and Markets Authority announced it will investigate whether customers can freely select artificial intelligence tools or face restrictions using Microsoft Copilot
• ▪The UK Competition and Markets Authority is examining whether rival technology developers can effectively compete with Microsoft's integrated Copilot artificial intelligence assistant

Reactions from Microsoft and Amazon Web Services

• ▪A Microsoft spokesperson rejected the Competition and Markets Authority's proposed strategic market status designation, asserting that all Microsoft products including Copilot are open and interoperable with competing services
• ▪Microsoft welcomed the Competition and Markets Authority's decision not to designate its cloud business under the UK's Digital Markets Competition Regime, while Amazon Web Services cited ongoing multicloud investments in 2026

Cloud market switching barriers and investigation

• ▪The UK Competition and Markets Authority stated on October 16, 2026, that Amazon Web Services and Microsoft must address remaining barriers to customer switching between cloud providers and using multiple cloud services
• ▪Although Amazon Web Services and Microsoft removed data transfer fees and connected data centres with rivals, the UK regulator kept open the possibility of a formal cloud sector investigation