The UK’s Competition and Markets Authority has proposed designating Microsoft’s business software ecosystem with strategic market status, opening the way to possible rules on software bundles, compatibility and customer choice.
The proposal, announced on 16 October, covers products used by more than one million UK businesses and public-sector organisations, according to the regulator. It is subject to consultation and is not a final decision.
For companies buying office applications, security tools and AI services, the investigation concerns how easily they can combine competing products or change suppliers without disrupting their operations.
What the proposed status would mean
Strategic market status is a designation under the UK’s digital competition regime for firms meeting specified market-power and strategic-significance tests. It allows the CMA to consider tailored requirements. The designation itself does not establish wrongdoing.
The investigation began on 14 May under the Digital Markets, Competition and Consumers Act 2024. It covers PC operating systems, productivity suites, security software, server operating systems and relational database management systems.
The last category refers to software that stores and organises structured information, such as customer and transaction records.
Bundles and compatibility are central
In its provisional assessment, the CMA said Microsoft’s position and commercial practices could restrict competition by making it difficult for customers to switch and for rival products to integrate effectively.
Its possible areas for intervention include how products are bundled, whether developers can connect competing services to Microsoft’s software, and whether customers can choose alternative AI tools alongside or instead of Copilot.
Security software bundles and restrictions affecting which cloud services can run licensed software are also among the issues identified.
Microsoft disputed the regulator’s assessment. Reuters reported that the company said its products, including Copilot, were interoperable and could be used alongside competing services.
Why the review matters to software buyers
A company comparing two applications cannot always judge them by their individual subscription prices. It may also need to account for staff training, connections to existing systems, security administration and the cost of moving its data.
A cheaper competing product may therefore be expensive to adopt if replacing one tool requires changes elsewhere. Conversely, an integrated package can offer convenience and reduce administrative work. The investigation will examine how competition operates within those purchasing decisions.
The review also comes as AI changes how businesses pay for software, adding usage charges to established subscriptions. Buyers increasingly need to compare the total cost of a working system rather than a single licence price.
The CMA is accepting responses until 5pm on 13 November 2026 and expects its final designation decision in February 2027. Any subsequent requirements would need their own legal basis and process. The proposal does not change customers’ contracts today.
