Britain’s Competition and Markets Authority has proposed designating Microsoft with strategic market status in its business software ecosystem, a move that could give the regulator new leverage over how the company designs, bundles and sells its products. The CMA published its proposal on 16 October 2026.
Strategic market status would allow the CMA to introduce targeted requirements intended to improve competition and customer choice. The proposal follows an investigation launched on 14 May 2026 into whether Microsoft should receive the designation for its business software ecosystem.
The regulator’s focus reaches across software used by over a million businesses and public sector organisations in the UK, including Word, Excel, Outlook, PowerPoint, Teams and Copilot, alongside Microsoft’s security, server and operating system products. Microsoft’s business software has around 20 million monthly users.
The CMA examined five areas: personal computer operating systems, productivity software suites, security software, server operating systems and relational database management systems. It found that Microsoft held a strong position in each of them.
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The regulator said customers face barriers when trying to switch products, narrowing their options and weakening the competitive pressure from other software developers. It also found that Microsoft’s commercial practices and the advantages gained from integrating products can encourage customers to adopt more of its software, creating obstacles that rivals struggle to match.
The next stage would look more closely at the way Microsoft bundles software and at whether outside developers can more easily connect their products to Microsoft’s business software ecosystem. The CMA will also assess whether customers can choose the artificial intelligence tools and functions that suit them, and whether alternative AI providers can compete on equal terms with Copilot.
Other areas for examination include whether the bundling and integration of Microsoft’s security products restricts customer choice. The CMA will also consider whether customers have effective choice over the cloud on which they deploy their software licences, and how Microsoft’s licensing practices affect that choice.
Microsoft disputes the CMA’s assessment and says its products are open, interoperable and able to operate alongside competing services. In a separate update on engagement over cloud services, the CMA said Microsoft and Amazon were taking material steps to promote choice, with further action to come.
Microsoft has also confirmed that it will not use confidentiality provisions to stop any party responding to the consultation.
The CMA’s consultation on its proposed designation remains open until 13 November 2026. It expects to make its final decision by 13 February 2027.
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