UK regulatory scrutiny of Microsoft market status

The UK Competition and Markets Authority (CMA) has proposed designating Microsoft with ‘strategic market status’ (SMS) under the Digital Markets, Competition and Consumers Act 2024. This designation, which is comparable to the European Union’s ‘gatekeeper’ status, follows an investigation launched in May 2026 into whether Microsoft leverages its dominance to stifle competition.

The CMA identified five key areas of strength: PC operating systems, productivity software suites (including Word, Excel, and Teams), security software, server operating systems, and relational database management systems. The regulator expressed concerns that high switching costs and commercial bundling create barriers for customers, potentially limiting access to diverse AI services and impacting the resilience of critical infrastructure and government entities.

Upcoming scrutiny will focus on cloud licensing, the integration of AI features such as Copilot, and the bundling of security products. While Microsoft has stated its products are designed to work with competitors, the CMA noted that the company and Amazon Web Services (AWS) must continue to address barriers regarding cloud service switching. A consultation period is open until November 13, 2026, with a final decision expected by February 13, 2027.