CMA proposes strategic market status for Microsoft

The UK's Competition and Markets Authority (CMA) proposed on October 16, 2026, to designate Microsoft with "strategic market status" in business software. The label would let the regulator set rules for how Microsoft sells and licenses products such as Windows, Office and Teams. For companies that run on Microsoft, it could change bundling, cloud licensing and the choice of AI tools.

Strategic market status, or SMS, is a designation under the UK's Digital Markets, Competition and Consumers Act 2024. It applies to firms with substantial and entrenched market power. Once a firm has it, the CMA can impose conduct rules. The CMA stresses that the finding does not imply wrongdoing, The Register reports.

What the CMA found

The CMA sees a strong Microsoft position in five areas, according to The Register:

Area	Examples
PC operating systems	Windows
Productivity suites	Word, Excel, Outlook, PowerPoint, Teams
Security software	Microsoft's security products
Server operating systems	Windows Server
Relational databases	SQL Server

Many customers treat these products as one integrated stack, the regulator found, and bundle discounts encourage that. Adopting a rival product can mean paying for two licenses that do the same job. That makes switching hard, The Register says.

The CMA is also looking at AI. It is examining whether customers can freely choose AI tools, and whether rival AI providers can compete with Microsoft's Copilot assistant.

The possible rules

The CMA published an indicative roadmap with the proposal. It lists three kinds of intervention, The Register reports:

• making sure Microsoft's technical design choices do not shut out other providers
• making sure commercial deals, such as bundling, do not limit competition
• stopping Microsoft from using its business software position to distort nearby markets, such as cloud services

Cloud is a long-running complaint. Rival cloud providers say Microsoft's licensing makes Windows Server and SQL Server cost more on clouds that are not Microsoft's own. An earlier CMA cloud investigation ended with promises from Microsoft and Amazon Web Services to lower switching barriers. The CMA says more can be done.

"Organizations should be able to choose the products that work best for them," said Sarah Cardell, the CMA's chief executive.

How Microsoft and others responded

Microsoft does not share the CMA's views in the proposed decision. "All our products - including Copilot - are open and interoperable," a spokesperson said, adding that the company will keep engaging constructively with the CMA.

The Browser Choice Alliance welcomed the proposal and said Microsoft pushes users toward its Edge browser. The Open Cloud Coalition, whose members include Google, said Microsoft's restrictive licensing distorts cloud competition and raises costs. Regulators in the US and the European Union are reportedly weighing similar steps, The Register adds.

The timetable

The investigation opened on May 14, 2026, according to the CMA's case page. The CMA says the timetable may change.

Date	Step
October 16, 2026	Proposed decision, consultation and roadmap published
November 13, 2026, 5pm	Consultation and roadmap comments close
November 2026	Microsoft may make oral representations
January 2027	Final decision report prepared
February 13, 2027	Legal deadline for the final decision

Microsoft has confirmed it will not use any confidentiality clause to stop a party from responding, the case page says.

What this means for developers

• Nothing changes yet. This is a proposal. No conduct rule can apply before a final designation, due by February 13, 2027.
• Customers can be heard. If licensing has kept you on a Microsoft product, the consultation is open until November 13. Microsoft has said it will not use confidentiality clauses to stop you.
• Watch cloud licensing first. The roadmap names cloud services as a market Microsoft could distort. Teams running Windows Server or SQL Server on another cloud should track any rule that changes what those licenses cost there.
• Expect a Copilot question. The CMA is studying whether rival AI tools can compete inside Microsoft's suite. A rule here could affect how easily other assistants plug into Office and Teams.
• Keep bundle math current. Any change to bundling would alter the cost of mixing Microsoft and non-Microsoft products. Note what your current bundle includes, so you can compare offers if terms change.