The UK’s Competition and Markets Authority (CMA) is preparing to launch a new antitrust investigation into Microsoft over its business software and cloud services. The probe will focus on whether Microsoft is using its strong position in products like office productivity tools and Azure cloud to make it harder for companies to switch to rival providers. Regulators are examining licensing rules, pricing structures, and bundled services that could be limiting competition in the enterprise software and cloud markets.
At the centre of the investigation is the Redmond-headquartered company’s dominance in enterprise software, particularly tools like Microsoft 365, Windows operating systems, and its Azure cloud platform. These products are deeply embedded in corporate IT systems across the UK and globally, meaning many organisations rely on Microsoft not just for software applications but also for the infrastructure that runs their digital operations. The CMA is expected to assess whether this level of dependence creates a competitive imbalance, especially when businesses attempt to move workloads to rival cloud providers like Amazon Web Services or Google Cloud.
A major issue under review is the structure of Microsoft’s licensing agreements. In many cases, companies purchasing Microsoft software also enter long-term agreements that can make it expensive and technically complex to shift to alternative platforms. Regulators are particularly concerned that such arrangements may create ‘lock-in effects’, where customers remain with one provider not because of preference, but because switching would involve high financial and operational costs.
Another area likely to be examined is Microsoft’s practice of bundling services across its ecosystem. By combining productivity software, identity management tools, security features, and cloud infrastructure under integrated contracts, Microsoft is able to offer businesses a single vendor solution. While this approach is often marketed as convenient and efficient for customers, regulators are questioning whether it also discourages the use of competing services by making Microsoft’s ecosystem the default or most cost-effective option.
If the CMA finds substantial evidence of market dominance and limited competition, it could consider designating Microsoft with “strategic market status” under the UK’s updated digital competition framework. This designation would give the regulator stronger powers to impose targeted rules on how Microsoft operates in the UK market.
This is not the first time the Competition and Markets Authority has raised concerns about the cloud market. In 2023, the watchdog launched a full-scale investigation into cloud infrastructure services, examining major players like AWS, Google Cloud and Microsoft over potential anti-competitive practices. Regulatory pressure has also intensified through legal action. In 2024, Microsoft faced a UK lawsuit worth over £1 billion, accusing it of imposing higher licensing fees on businesses using rival cloud providers. By 2025, the case had expanded into a multibillion-pound class action – valued at around £2.1 billion and involving nearly 60,000 businesses – alleging overcharging for running Windows Server on competing clouds. Earlier reviews by the regulator had already found that competition in the UK cloud sector is not working effectively, largely due to the dominance of a few major firms.
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