UK watchdog proposes special market status for Microsoft’s business software

The UK’s Competition and Markets Authority (CMA) has proposed designating Microsoft with Strategic Market Status (SMS) in the business software market. The proposal follows an investigation into Microsoft’s software practices and their impact on competition.

The CMA said around 20 million people in the UK use Microsoft software each month, across private businesses and public sector organisations. It said Microsoft has a strong position in each of the five areas it investigated: operating systems, productivity software, security software, server operating systems and database management systems.

The investigation examined whether barriers to switching, commercial practices and integration advantages make it difficult for customers to leave Microsoft’s ecosystem. The CMA is also assessing whether Microsoft’s market power could give its Copilot AI an unfair advantage.

If Microsoft receives SMS designation, the CMA would likely seek changes to bundling and licensing, as well as improvements to interoperability so customers can combine software from different providers. The CMA has also been engaging with Microsoft outside the formal designation process.

CMA chief executive Sarah Cardell said organisations should be able to choose suitable products, switch providers and combine services from different suppliers. A Microsoft spokesperson said its products, including Copilot, are open and interoperable, and that the company would continue engaging with the CMA.