Windows, Office, Teams, Copilot, server operating systems, and the cloud licensing the regulator already flagged last July. A nine-month investigation, a February 2027 designation decision, and the first CMA SMS case to walk straight through the door the cloud market inquiry left ajar.
The UK’s Competition and Markets Authority has opened a Strategic Market Status investigation into Microsoft’s business software ecosystem, the fourth such case under the digital markets regime that came into force in January 2025.
The previous three (Google search, Apple mobile, Google mobile) were designated in October. Microsoft is now the next name on the list, and the scope is wider than anything the CMA has previously taken on.
The case covers Windows, Office (Word, Excel, and the rest), Teams, the rapidly expanding Copilot footprint, server operating systems, database management systems, and security software.
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Microsoft has, on the CMA’s own count, more than 15 million commercial users across that ecosystem in the UK, sold to hundreds of thousands of businesses and public-sector buyers.
The regulator’s central question is whether Microsoft uses that position to limit customer choice, and the mechanisms it has named are the familiar three: bundling, interoperability gaps, and default settings.
The interesting move sits in the fine print. The CMA’s cloud services market investigation closed in July 2025 with a final decision that found Microsoft was charging AWS and Google Cloud materially higher wholesale prices for its own software than it charged Azure customers for the same products.
The inquiry group recommended SMS investigations into both Microsoft and AWS in the cloud. The CMA Board, in the months that followed, declined to prioritise either, citing voluntary changes the two companies had made to egress fees and interoperability terms.
Today’s case quietly puts the Microsoft licensing question back inside CMA jurisdiction, this time through the business-software door rather than the cloud one.
Sarah Cardell, the CMA’s chief executive, framed the launch in the language the regime requires: “Business software is a cornerstone of how the UK economy functions, from small businesses to major public services and infrastructure.”
The targeted-action wording follows. SMS designation does not, on the CMA’s own emphasis, assume wrongdoing. What it does is unlock the toolkit: conduct requirements, pro-competition interventions, and the bespoke remedies that the regime was written to allow without the multi-year market-investigation timetable that produced the cloud finding in the first place.
The AI layer is explicit in the scope document. The CMA wants to know whether competing AI providers can integrate with Microsoft’s business software, and whether Copilot’s defaults inside Office and Teams are being set in a way that forecloses challenger AI tools.
This is the question Brussels has been circling for eighteen months, and which the EU AI Act handles more procedurally. The CMA, characteristically, has chosen the SMS instrument first and the public consultation second.
The procedural calendar is short by competition-law standards. Invitation-to-Comment responses are due by 4 June. The investigation must be completed within nine months, with a designation decision by February 2027.
A public consultation will sit ahead of the final call. The CMA has flagged in advance that it wants to hear from challenger AI companies, business-software customers, security-software rivals, and any organisation that has tried and failed to combine Microsoft’s productivity stack with a competitor’s tools.
Microsoft’s response will become public over the next month, and its recent stance signals the line. In its rebuttal to the cloud market investigation, Microsoft argued that competition was working and its licensing changes had already addressed the regulator’s concerns.
The same arguments will run again, with the difference that the CMA is now starting from a different statute and a wider remit, and that the £1bn UK class action over the same licensing question gives it an evidentiary parallel it did not have in 2024.
The decision, when it comes, will land at the moment Copilot adoption inside UK businesses is moving from pilot to procurement.
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