The UK Competition and Markets Authority (CMA) is considering designating Microsoft as having 'strategic market status' in the commercial software sector. This classification could grant regulators the power to intervene in the company's bundling practices, specifically involving Excel, Teams, and the Copilot AI assistant.
The investigation began in May to determine if Microsoft's dominance in PC operating systems, office software, security, and cloud services hinders competition. The CMA noted that customers face significant barriers when switching to alternative providers, which reinforces Microsoft's market position.
Microsoft disputes these findings, stating that its products, including Copilot, are designed with open standards to ensure interoperability with competitors. The regulator intends to further examine whether customers have the freedom to choose AI tools and how software licensing impacts cloud service selection.
If the proposal is finalized by February 2027, Microsoft would become the third company subject to the UK's new digital markets regulatory regime. Google and Apple have already faced similar designations regarding their search and mobile platform businesses.
The CMA is also reviewing cloud services provided by Microsoft and Amazon Web Services (AWS). While both companies have introduced measures to facilitate data center interconnection and reduce data transfer fees for switching providers, the regulator maintains that further improvements are necessary.
