The UK’s competition watchdog wants to put Microsoft’s business software under closer supervision, raising questions about how easily companies can choose alternatives to familiar products such as Teams, Microsoft 365 and Copilot.
The Competition and Markets Authority (CMA) announced on 16 October that it proposes giving Microsoft Strategic Market Status (SMS) across its business software ecosystem. That would open the door to targeted competition measures if the regulator ultimately considers them necessary.
It’s a substantial market. More than a million UK businesses and public sector organisations use Microsoft’s software, with around 20 million people using it each month. For now, though, this is a provisional decision. Microsoft has not been found to have done anything unlawful, and the CMA has ordered no changes to pricing, subscriptions or software.
Why the CMA is looking at Microsoft’s business software
Most offices don’t use Microsoft products in isolation. A Windows PC may be connected to Outlook, Word, Excel, Teams and several security or management services. Keeping everything together has obvious advantages, especially for businesses with limited IT resources.
The question is what happens when an organisation wants to replace just one part. Moving away from a meeting service or security platform may be harder if its accounts, files and day-to-day processes are closely tied to other products. The CMA is investigating whether those difficulties give Microsoft an advantage that competitors struggle to overcome.
Its investigation began in May and covers five areas: PC operating systems, productivity software suites, security software, server operating systems and relational database management systems. The regulator’s provisional assessment is that Microsoft has a strong position in each.
SMS designation wouldn’t mean Microsoft must split up its software suite. It would give the CMA powers to consider specific requirements, subject to further legal tests and processes.
Bundling, Teams and licensing are in the spotlight
Imagine a business that wants to keep Excel and Outlook but prefers another service for meetings. Or a firm that uses Windows throughout its offices but wants its security tools supplied by a different company. Both should be able to judge the alternatives on cost, compatibility and how well they work.
The CMA wants to examine whether software bundles, technical integration and switching costs make those choices harder than they need to be. Microsoft’s licensing practices are part of the picture too, including the flexibility customers have when running software on rival cloud platforms.
None of that amounts to an order to unbundle Teams or rewrite existing licences. The regulator is identifying where closer examination could lead to action, should it confirm Microsoft’s designation.
Copilot brings AI choice into the debate
Copilot is an increasingly visible part of Microsoft’s workplace offering. As AI assistants begin handling tasks across documents, meetings and business systems, the ability to use a rival assistant alongside Microsoft software could become just as important as choosing a different email or video-calling service.
The CMA intends to examine whether other AI providers can compete fairly and whether customers can combine the tools they want. A business might be perfectly happy with Microsoft 365 but prefer a specialist AI service for a particular job. The question is whether its software setup allows that without unreasonable obstacles.
There are also practical considerations. Organisations need AI tools that work with their existing accounts, permissions and security policies. Better interoperability could widen choice, but any specific change would have to be considered separately. No new Copilot feature or third-party integration has been announced.
Microsoft’s AI ambitions extend beyond its business subscriptions, as seen in its recent Windows AI developments. The CMA’s proposal is narrower: it concerns competition across the company’s business software ecosystem.
Security and cloud services matter too
The regulator will look at whether bundling and integrating Microsoft’s security products affects the ability of independent suppliers to win customers. It is also interested in how software licensing influences the choice of cloud provider.
Separately, the CMA says Microsoft and Amazon Web Services have made progress in removing barriers to switching cloud services. Improvements include changes to data transfer charges and ways for competitors to request better interoperability. The regulator still wants more work on moving applications and managing identities across different clouds.
That separate cloud engagement should not be mistaken for a final decision on Microsoft’s business software. The CMA is keeping open the possibility of a formal cloud investigation, but has not announced one today.
Microsoft disagrees with the regulator
Microsoft disputes the CMA’s provisional assessment. In comments reported by Reuters, it maintains that its products are open and interoperable.
The consultation will give Microsoft, competitors and customers an opportunity to challenge the regulator’s findings or provide further evidence before it reaches a decision.
Does anything change for Microsoft 365 customers now?
No. Businesses can carry on using Microsoft 365, Teams, Windows and Copilot under their existing arrangements. The CMA hasn’t required Microsoft to alter prices, functionality or subscription terms.
The investigation is focused on business software competition. It is separate from Microsoft’s recently announced OneDrive storage changes for Microsoft 365 Family customers, which are not affected by this proposal.
The next decision may establish whether the CMA has grounds for a more active regulatory role. It will not, by itself, guarantee lower bills or different software packages.
What happens next?
The CMA consultation closes at 5pm on 13 November 2026. Businesses, public bodies, software developers and other interested parties can submit their views.
The CMA must make its final designation decision by 13 February 2027. If Microsoft receives SMS designation, the regulator would still need to consider and justify any targeted measures through the relevant processes.
Tech Torque Verdict
Microsoft’s connected software has made everyday work simpler for a lot of organisations. That is a strength, not a problem in itself. Trouble arises if keeping the useful parts also makes it unnecessarily difficult to choose something different.
Copilot gives the investigation extra weight. As AI becomes part of office workflows, businesses will want freedom to choose assistants and security services that suit them, without having to rebuild everything else. The CMA has made a serious case for examining those choices, but its findings remain provisional and Microsoft has a right to respond. Customers can keep using their software while that argument plays out.
