Analysis
The UK's Competition and Markets Authority proposed designating Microsoft with strategic market status (SMS) in business software, a step that would let the regulator intervene directly in how the company sells and bundles Word, Excel, Outlook, PowerPoint and Teams, along with security, server and operating-system software. The CMA opened its investigation in May 2026 and says finding the SMS criteria are met would not itself imply wrongdoing. Source
What The CMA Could Actually Force Microsoft To Change
The regulator is weighing interventions on three fronts: stopping Microsoft's technical design choices from restricting rivals, preventing commercial bundling that limits competition, and blocking Microsoft from using its business-software power to distort adjacent markets such as cloud services. Separately, the CMA says it's examining whether customers can freely choose the best AI tools and whether rival AI providers can compete fairly against Copilot -- explicitly pulling Microsoft's AI push into an antitrust case built on decades of Office dominance. This follows the CMA's broader scrutiny of Microsoft's UK footprint, including its AI regulation stance under Brad Smith earlier this month.
The pushback splits roughly into two camps. CMA chief executive Sarah Cardell framed the goal simply: "Organizations should be able to choose the products that work best for them." The Browser Choice Alliance argues Microsoft "leverages its market power from Windows and productivity software" to steer users toward Edge, while the Open Cloud Coalition, which includes Google, says Microsoft's "restrictive software licensing practices distort competition in the cloud, harm choice, and increase costs." Microsoft disputes the premise entirely, saying "all our products -- including Copilot -- are open and interoperable."
The CMA's inquiry spans five specific markets: personal computer operating systems, productivity software suites, security software, server operating systems and relational database management systems -- a scope that mirrors, and extends, Microsoft's long history of EU antitrust fights over bundling.
None of this moves quickly. The CMA's comment period on the proposed SMS designation runs through November 13, 2026, with a final decision due February 13, 2027, and any specific remedies would likely follow well after that. Microsoft has already signaled it will contest the underlying premise rather than negotiate upfront, which means the February decision date, not today's proposal, is the one worth putting on the calendar.
