The Competition and Markets Authority (CMA) has opened a consultation on whether to designate Microsoft with strategic market status (SMS) in business software, following an investigation begun in May into the company's portfolio including Word, Excel, Outlook, PowerPoint, Teams, security software, servers and operating systems.
The regulator said it is examining whether Microsoft holds 'substantial and entrenched market power' through its software suite, which could be stifling competition and harming buyer choice. The CMA found that Microsoft has been by far the largest provider of business software in the UK for decades, and that customers face barriers to switching providers, limiting their choice and weakening the ability of rivals to offer competing products.
The proposal notes that many customers treat Microsoft's portfolio as a unified, end-to-end integrated stack, helped by discounted pricing for buying bundles of applications together. The CMA argues customers are less likely to adopt alternatives because doing so would duplicate licensing costs.
The regulator stressed that meeting the criteria for SMS designation would not imply or assume wrongdoing by Microsoft. Possible interventions include ensuring Microsoft's technical design choices do not restrict the use of other providers, that commercial arrangements such as bundling do not limit effective competition, and that Microsoft does not use its market power in business software to distort competition in adjacent activities such as cloud services.
Cloud providers have previously complained that Microsoft's licensing terms make it more costly to run Windows Server and SQL Server on non-Microsoft clouds. The proposed designation grew out of the CMA's cloud services investigations, which largely fizzled out after the watchdog secured undertakings from Microsoft and Amazon Web Services to reduce barriers to switching between clouds. The CMA said more can be done to address those barriers and it will continue working with both companies.
CMA chief executive Sarah Cardell said: 'Organizations should be able to choose the products that work best for them, switch provider when they want to and combine services from different suppliers. We want to ensure businesses have the freedom to choose how they use Microsoft's products alongside alternatives.'
Regulators including the US Federal Trade Commission and the European Commission are watching the case, with similar actions under consideration. Comments on the proposal must be submitted by November 13, and the CMA will make its final decision by February 13, 2027.