Microsoft faces proposed strategic market status in the UK

The UK Competition and Markets Authority (CMA) has proposed designating Microsoft with ‘strategic market status’ (SMS) due to its dominant position in the business software ecosystem. This designation, under the Digital Markets, Competition and Consumers Act 2024, would grant the regulator powers to intervene in how the company bundles products and manages interoperability.

The CMA’s provisional findings identify five key areas of strength: PC operating systems, productivity software suites (such as Word, Excel, and Teams), security software, server operating systems, and relational database management systems. The regulator noted that high switching costs and commercial bundling create barriers that prevent customers from choosing alternative providers.

Specific areas of upcoming scrutiny include cloud licensing, the integration of AI features like Copilot, and the bundling of security products. The CMA aims to ensure businesses have the freedom to combine products from different providers. A final decision on the designation is expected by February 13, 2027.

Microsoft has stated that its products are designed to work with competitors' services. Additionally, the CMA noted that Microsoft and Amazon Web Services (AWS) must continue to address barriers regarding cloud service switching and multi-cloud usage.