UK regulator proposes special status for Microsoft in business software

The UK Competition and Markets Authority (CMA) published a draft decision on October 16, 2026. In it, the regulator recommends designating Microsoft with so-called strategic market status (SMS) in the company's business software ecosystem. This is a proposal, and no final decision has been made.

Strategic market status is a designation in British law for companies with such a strong position that the regulator can take a closer look at how they do business.

From investigation to draft

The CMA opened the investigation on May 14, 2026, under the Digital Markets, Competition and Consumers Act 2024. It is the fourth SMS investigation under the UK's digital markets regime, which took effect in January 2025.

According to The Next Web, the investigation covers Windows, the Office applications, Teams, Copilot, server operating systems, database systems and security software. Microsoft has more than 15 million commercial users in the UK, according to the report.

What is the CMA looking at?

The CMA is assessing whether bundled sales of products, limited interoperability (systems not working well together) and default settings can make it hard for customers to switch and weaken pressure from competitors. According to The Next Web, the regulator is looking at, among other things, whether rival AI providers can plug into Microsoft's business software, and whether Copilot's default placement in Office and Teams keeps competitors out.

According to Techi, the focus is on how Copilot is distributed together with Windows, Microsoft 365, Teams and Azure, not on the quality of the AI model.

When the investigation was opened, CMA chief executive Sarah Cardell said that business software is a cornerstone of how the UK economy works, from small businesses to large public services and infrastructure.

The investigation builds on the CMA's cloud investigation from July 2025. According to the report, it found that Microsoft charged AWS and Google Cloud higher wholesale prices than Azure customers for the same products.

What happens next?

The proposal is not a fine, a product ban or a finding of wrongdoing. According to Techi, the CMA has not ordered Microsoft to spin off Copilot or change the price of Microsoft 365.

Microsoft rejects the concerns and says its products are open and interoperable.

Responses to the consultation must be submitted by 5 p.m. on November 13, 2026, and non-confidential responses will be published. The CMA must make its final decision by February 13, 2027.