The UK Competition and Markets Authority (CMA) has proposed designating Microsoft with strategic market status (SMS) in its business software ecosystem, a step that could allow targeted competition rules affecting products used by millions of people across Britain. The proposal, announced on 16 October 2026, is open for consultation and is not a final regulatory decision.
What has the regulator found?
The CMA says Microsoft holds a strong position across five areas it examined: personal computer operating systems, productivity suites, security software, server operating systems and relational database management systems. Its provisional assessment highlights difficulties customers face when switching suppliers and advantages associated with integrating Microsoft products. The watchdog says Microsoft business software is used by more than one million UK businesses and public-sector organisations, with around 20 million monthly users.
What changes could follow?
The regulator has published an indicative roadmap of possible interventions. It plans to examine whether competing AI tools can operate on fair terms alongside Microsoft Copilot, whether bundling security products limits choice, and whether software licensing affects customers’ ability to use alternative cloud providers. These are areas for further evidence gathering, not rules already imposed.
Microsoft responds
Microsoft disputed the regulator’s assessment. In comments reported by Reuters, a spokesperson said the company did not share the CMA’s view and maintained that its products, including Copilot, are open and interoperable with competing services. The company also welcomed the CMA’s acknowledgement of steps taken to improve cloud choice.
What happens next?
The consultation closes at 5pm on 13 November 2026. The CMA must reach its final decision by 13 February 2027. A designation would not itself establish wrongdoing; it would provide a legal basis for considering proportionate, targeted measures, subject to further requirements. Separately, the CMA says Microsoft and Amazon Web Services have made progress on cloud switching, although further work is needed.