The Competition and Markets Authority has announced a coordinated package of measures across cloud services and business software, aimed at improving choice, switching and resilience for UK businesses and public sector organisations. The regulator said the steps reflect a flexible use of the UK digital markets competition regime to address current concerns while also responding to changes in software markets as Artificial Intelligence capabilities are built into everyday workplace tools.
A central measure is a strategic market status investigation into Microsoft’s business software ecosystem, commencing in May. Hundreds of thousands of UK businesses and public sector organisations use Microsoft’s business software every day, including Windows, Word, Excel, Teams and increasingly Copilot. The CMA said an SMS designation would allow it to act on a major concern from the cloud market investigation, namely Microsoft’s use of software licensing reducing competition in cloud. It would also provide a route to ensuring a level playing field among providers at a critical moment, as Artificial Intelligence-driven innovation reshapes competition in productivity software.
Alongside that investigation, Microsoft and Amazon have set out actions on cloud egress fees and interoperability following engagement with the CMA. The regulator said these changes will reduce expense and effort for UK customers when using more than one cloud provider. The CMA has also said further steps are required to help UK customers multi-home and switch, and it will seek views from customers and competitors as discussions continue. The Board will review progress in 6 months.
The regulator linked the latest moves to findings from its 2025 market investigation into cloud services, which found that Amazon and Microsoft have positions of significant market power. That investigation closed in July 2025 and identified limits to customer choice caused by data egress fees, barriers to interoperability that restrict switching and multi-cloud use, and licensing of Microsoft’s key business software on the cloud. The CMA said subsequent engagement with customers, the two companies and their rivals has led to material steps to lower egress fees and improve interoperability.
The CMA also flagged wider concerns about Microsoft’s position in business software, especially in productivity software, operating systems, database management and related security services. It said the growing use of advanced Artificial Intelligence assistants and emerging agentic technologies in familiar workplace tools makes this a pivotal period for competition, productivity and value for money. Once started, the SMS investigation can take up to 9 months to complete, with the CMA setting out a provisional view prior to making a final decision.
