The UK Competition and Markets Authority (CMA) has opened a strategic market status (SMS) investigation into Microsoft’s business software ecosystem under the digital markets competition regime introduced in January 2025.
The CMA’s inquiry will consider whether Microsoft holds SMS in business software and whether that position could affect customer choice and competition.
The watchdog will assess practices, including product bundling, interoperability constraints and default settings that could make switching harder or reduce competitive pressure from rival suppliers.
The investigation will cover Microsoft products used by UK organisations across productivity software, PC and server operating systems, database management systems and security software.
The CMA will also examine how competing AI services integrate with Microsoft’s workplace software, as AI functionality becomes part of commonly used tools.
Microsoft’s software ecosystem has more than 15 million commercial users, according to the CMA, and is used by hundreds of thousands of UK businesses and public sector organisations.
The regulator said it has heard concerns that customers may not always be able to combine Microsoft software with products from other providers, which could affect their ability to choose between suppliers.
If the CMA designates Microsoft with SMS, it would also be able to consider interventions linked to a concern raised in its cloud market investigation. The CMA said it previously found Microsoft’s software licensing reduced competition in cloud services.
The CMA is inviting input from UK-based and international organisations, including challenger technology companies, customers and competitors, including firms in the security sector. The regulator said it will gather evidence from Microsoft and engage with stakeholders before deciding whether to apply an SMS designation.
The UK CMA CEO Sarah Cardell said: “Business software is a cornerstone of how the UK economy functions, from small businesses to major public services and infrastructure. Hundreds of thousands of customers in the UK rely on Microsoft’s systems, which is why it’s so important to ensure these services are delivering good outcomes.
“Our aim is to understand how these markets are developing, Microsoft’s position within them, and to consider what, if any, targeted action may be needed to ensure UK organisations can benefit from choice, innovation and competitive prices.”
The CMA said the investigation must conclude within nine months, and it plans to consult publicly before reaching a decision. It said it aims to decide on an SMS designation by February 2027.
