Britain’s competition regulator has proposed putting Microsoft’s business software empire under its toughest digital-markets regime. The Competition and Markets Authority said on Friday that it plans to designate Microsoft with strategic market status in its business software ecosystem, according to the CMA’s announcement, opening a consultation ahead of a final decision due by February 2027.
Designation would not punish Microsoft for anything. The regulator is explicit that strategic market status assumes no wrongdoing. What it would do is give the CMA power to consider targeted rules — conduct requirements or pro-competition interventions — aimed at how Microsoft bundles, integrates and licenses the software that workplaces run on.
A bundle that reaches almost every desk
The scope is broad. The CMA’s case covers Word, Excel, Outlook, PowerPoint and Teams, the increasingly prominent Copilot assistant, and Microsoft’s security, server and operating system products. Together, the regulator says, they are used by more than a million businesses and public sector organizations in the UK, with around 20 million monthly users.
The investigation examined five areas: personal computer operating systems, productivity software suites, security software, server operating systems and relational database management systems. The CMA’s provisional finding is that Microsoft holds a strong position in every one of them.
Switching is the whole argument
According to the CMA, that strength does not rest mainly on product quality. It rests on how hard it is to leave. Barriers to switching limit customer choice and weaken the pressure rival developers can apply, the regulator found, while Microsoft’s commercial practices and the integration advantages inside its own ecosystem steer customers toward adopting more of its products — advantages competitors cannot easily reproduce.
The timing, in the CMA’s framing, matters because of AI. As generative and agentic tools spread through workplace software, the regulator wants customers to be able to mix and match products from competing suppliers rather than defaulting to whichever assistant ships inside the suite they already use.
Copilot is explicitly on the roadmap
Alongside the proposed designation, the CMA published an indicative roadmap of where it may act if Microsoft is designated. Three areas stand out. First, AI choice: whether customers can freely pick the AI tools that suit them, and whether rival AI providers get a level playing field against Copilot. Second, security: whether the way Microsoft bundles and integrates its security products limits what customers can choose instead. Third, cloud licensing: whether customers can genuinely choose which cloud runs their Microsoft software licenses, and how Microsoft’s licensing practices affect that choice.
The roadmap also covers software bundling more generally and making it easier for outside developers to integrate their products with Microsoft’s ecosystem. The CMA has invited views on the roadmap by November 13, 2026.
Microsoft disagrees
Microsoft does not accept the regulator’s reading. A company spokesperson, quoted by Reuters, said Microsoft does not share the CMA’s views and described its products — Copilot included — as open and interoperable, giving customers the ability to use them alongside competing services.
The CMA’s chief executive, Sarah Cardell, framed the proposal around freedom to combine: organizations should be able to choose the products that work best for them, switch providers when they want to, and combine services from different suppliers. The consultation now tests whether designation is the right tool to deliver that.
Cloud steps, and what happens next
Friday’s announcement also carried an update on the CMA’s separate cloud work. The regulator said Microsoft and Amazon Web Services have taken material steps to improve choice, including connecting their data centers with rivals, removing data transfer fees for customers changing providers, and building tools to automate parts of switching — while adding that more remains to be done, with a further update due in spring 2027.
If the designation is confirmed in February, Microsoft would become the third company brought under Britain’s new digital market powers, after Google and Apple received strategic market status in October 2025, according to Reuters. For the U.S. tech industry, the case is worth watching for a specific reason: it is the first of these designations built around business software and AI bundling, rather than search or phone platforms — and its roadmap reads like a template other regulators could borrow.
