The Competition and Markets Authority has taken its first formal steps towards designating Microsoft with strategic market status in business software, a move that could lead to new rules on how the tech giant bundles and sells its workplace products across the United Kingdom.
According to the CMA, Microsoft’s business software ecosystem – encompassing Word, Excel, Outlook, PowerPoint, Teams and its newer AI assistant Copilot, alongside security and server products – is used by more than one million businesses and public sector organisations in the UK, reaching around 20 million monthly users.
The watchdog is now consulting on whether Microsoft’s position in the market justifies the strategic designation, which would allow the regulator to impose targeted interventions designed to promote competition and customer choice.
Concerns over bundling and switching barriers
The CMA’s provisional findings highlight that Microsoft holds a strong position across five key areas of digital activity: personal computer operating systems, productivity software suites, security software, server operating systems and relational database management systems.
The regulator said customers face significant barriers when trying to switch away from Microsoft products, which limits their choices and weakens competitive pressure on the company. Commercial practices and integration advantages can push customers towards adopting more Microsoft products, creating further obstacles that rival software developers struggle to overcome.
Sarah Cardell, the CMA’s Chief Executive, said in a statement that business software and cloud services underpin workplaces across the UK, from small firms to vital public services. She emphasised that organisations should be able to choose the products that work best for them, switch provider when they want to and combine services from different suppliers.
“We want to ensure businesses have the freedom to choose how they use Microsoft’s products alongside alternatives,” Cardell said.
AI tools and cloud licensing under scrutiny
The CMA has published an indicative roadmap setting out areas for further investigation if the designation goes ahead. Key priorities include assessing whether customers can freely choose the best AI tools for their needs and whether alternative AI providers have a fair chance to compete with Microsoft’s Copilot.
The regulator will also examine whether the way Microsoft bundles and integrates its security products limits customer choice, and whether its cloud licensing practices give customers effective freedom to deploy software licenses on different cloud platforms.
The inquiry comes as the business software sector undergoes rapid change, with increased AI functionality and a shift towards agentic AI embedded in familiar workplace tools. The CMA said UK customers will benefit most when they can access the best tools in the market and mix and match software and AI services from a broad range of competing suppliers.
Separately, the CMA reported progress in its engagement with Amazon Web Services and Microsoft on cloud services. Both companies have made material steps to promote customer choice, including connecting their data centres with rivals such as Google, removing data transfer fees for customers changing providers, and rolling out AI tools to automate technical steps required to switch.
The watchdog said it will continue working with both firms to address remaining barriers, focusing on improving how identity and access management works across clouds. A further update on cloud services is expected in spring 2027.
What this means for Poles in the UK
This move affects Polish-owned businesses, Polish workers employed by UK firms and public sector organisations that rely on Microsoft’s software ecosystem daily. If the CMA proceeds with the strategic market status designation, it could eventually lead to lower software costs for businesses through increased competition, more choice when selecting workplace tools and easier switching between providers.
For Polish entrepreneurs running small and medium-sized enterprises in the UK, the investigation may result in fairer licensing terms and better integration options with alternative software providers, reducing dependence on a single technology supplier. Polish employees working in sectors that use Microsoft products may also benefit from improved AI tool choices as their employers gain more freedom to select and combine services.
The CMA is currently consulting on the proposed designation, with a final decision expected by February 2027. Businesses and organisations can submit views on the proposal and the accompanying roadmap. Full details of the CMA’s work are available on the Microsoft business software ecosystem page on GOV.UK.
