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Sunday, 18 October 2026

Compiled with AI from public news sources. Folio is editorial commentary for commercial-awareness practice, not legal advice. Verify any detail against the linked sources before relying on it professionally.

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Top Story/Regulation

CMA Proposes to Designate Microsoft with Strategic Market Status in Business Software and Publishes Cloud Services Progress Update

On 16 October 2026, the Competition and Markets Authority (CMA) proposed to designate Microsoft with strategic market status (SMS) in its business software ecosystem, opening a formal consultation before any final decision. SMS designation is a tool available under the UK's digital markets competition regime, allowing the CMA to impose bespoke conduct requirements on firms with entrenched, substantial market power in a strategic digital activity. The CMA's findings supporting the proposed designation are wide-ranging. Microsoft holds a strong position across five areas: personal computer operating systems, productivity software suites (including Word, Excel, Outlook, PowerPoint and Teams), security software, server operating systems, and relational database management systems. The regulator found that switching barriers limit customer choice and that commercial practices and integration advantages entrench Microsoft's position against rival software developers. Microsoft's business software products are used by over one million businesses and public sector organisations in the UK, with approximately 20 million monthly users. Alongside the SMS proposal, the CMA published an indicative roadmap of possible future interventions. Priority areas include: whether customers can freely choose AI tools and whether alternative AI providers can compete on a level playing field with Microsoft's Copilot; whether security product bundling limits choice; and whether cloud licensing practices restrict effective cloud portability. On cloud services, the CMA published a separate update covering the period March to October 2026. Both Amazon Web Services (AWS) and Microsoft have made material progress on commitments announced in March 2026, including connecting data centres with rivals beginning with Google, removing data transfer fees for customers switching cloud providers, and introducing interoperability request mechanisms. The CMA nonetheless stated that more action is needed, including improvements to identity and access management (IAM) across cloud providers, and confirmed it will publish a further update in Spring 2027. CMA Chief Executive Sarah Cardell said the regulator wants to ensure businesses can choose, switch, and combine digital services without being overly dependent on a single provider.

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Bigger Picture

Sector Watch

CMA Digital Markets Activation

The CMA's proposed SMS designation of Microsoft in business software marks the most consequential use of the UK's digital markets competition regime since the powers came into force. The regulator's indicative roadmap signals years of follow-on investigations covering AI bundling, security product integration, and cloud licensing, creating sustained compliance advisory demand across technology and competition practices. Simultaneously, the Telegraph merger closure illustrates the continuing force of the Enterprise Act 2002 public interest intervention regime in media M&A, leaving the title's ownership unresolved and any future buyer facing full dual-track CMA and Ofcom scrutiny from the outset. Together, these two CMA actions show the authority moving confidently across both digital markets regulation and traditional public interest merger control, making CMA strategy advice a core competency requirement for any firm advising significant UK-facing businesses.

One to Follow

CMA consultation on Microsoft's proposed strategic market status (SMS) designation in business software, with the indicative roadmap of interventions covering Copilot, security bundling, and cloud licensing to follow if designation is confirmed

The consultation outcome will set the template for how the CMA exercises its new digital markets powers, directly affecting technology contracting, public procurement strategy, and AI tool adoption across the UK economy. Competition, technology regulatory, and public law practices will all be activated by the designation decision and any subsequent conduct requirements imposed on Microsoft.

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