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. Chief Executive said the regulator wants to ensure businesses can choose, switch, and combine digital services without being overly dependent on a single provider.