Microsoft could face stricter competition rules in the UK after the country’s watchdog said on Wednesday that it will look into designating the tech giant’s business software ecosystem with so-called “strategic market status” (SMS).

The Competition and Markets Authority (CMA) said the investigation into designating Microsoft’s suite of business products – such as Windows, Word, Excel, Teams and Copilot – would start in May.

If Microsoft software is designated as having SMS it would unlock bespoke powers for the CMA to tackle platform-specific competition concerns.

In a press statement, the CMA said a designation for the business software would allow it to act on a major concern identified by an earlier cloud market investigation, after the regulator found that Microsoft’s use of software licensing was reducing competition in the cloud sector.

The CMA also said the status would give it a pathway to ensure a level playing field among productivity software providers at a “critical moment” – as AI-driven innovation, including agentic AI and digital tools like AI assistants, are reshaping competition.

UK users would benefit most if a broad range of competitors can integrate AI services into Microsoft’s business software, the CMA added.

The SMS designation procedure typically takes nine months under the UK’s digital competition rulebook, which has a similar intent as the EU’s Digital Markets Act (DMA).

Wider cloud market actions

In the same bundle of announcements, the UK regulator said Microsoft and Amazon have taken steps to address concerns about interoperability and cloud egress fees in the wake of a CMA cloud market report last summer which found the pair’s services had significant market power.

In separate press statements on Tuesday, Amazon and Microsoft said they had taken steps to resolve the interoperability concerns identified by the CMA and allow for easier data transfer across clouds by lowering fees for customers to move data.

“These changes will reduce expense and effort for UK customers when using more than one cloud provider,” the CMA wrote in a press release.

At the same time, the regulator said its engagement with both companies continues – stipulating that it expects them to take further steps to make it easier for UK customers to switch cloud providers or use multiple suppliers.

Last November, the European Commission opened its own probe of Amazon and Microsoft’s cloud services – looking at whether they should be designated under the bloc’s DMA. The EU’s investigation is due to conclude within 12 months.

(nl)