UK competition regulator targets Microsoft’s business software grip

The UK's competition watchdog, the Competition and Markets Authority (CMA), has proposed designating Microsoft as having "strategic market status" in the business software sector. This move could enable the UK government to intervene in how the tech giant bundles products like Excel, Teams, and its Copilot AI assistant. The CMA initiated an investigation in May to determine if Microsoft's dominance in software used by about 20 million people in Britain monthly is uncompetitive.

The regulator found that Microsoft holds a strong position in operating systems, productivity, security, server, and database management software. Customers face significant barriers when attempting to switch away from Microsoft products. A Microsoft spokesperson declined to agree with the CMA's assessment, stating that all its products, including Copilot, are open and interoperable, enabling customers to utilize them alongside competing services.

The CMA plans to scrutinize whether customers can freely select AI tools and if rivals can compete with Microsoft's Copilot. It will also investigate if Microsoft's integration of security products hampers customer choice and how its licensing practices impact cloud options. CMA Chief Executive Sarah Cardell emphasized that business software and cloud services serve as the backbone of workplaces across Britain, ranging from small enterprises to essential public services.

She stressed that organizations should be able to choose the products that best meet their needs, switch providers as desired, and combine services from different suppliers. The regulator intends to solicit feedback on the proposed designation before making a final decision by February. If designated, Microsoft would be the third company subject to Britain's new digital market powers, following Google and Amazon.

Previously, the regulator imposed new requirements on Google's search services, requiring transparency in its search rankings and allowing publishers to stop content from powering the US company's AI features. The CMA also expressed concerns about Amazon Web Services (AWS) and Microsoft regarding barriers to switching cloud providers and using multiple cloud services.

While both companies have made strides in promoting competition, such as connecting data centers with rivals and removing data transfer fees for customers switching providers, the CMA believes more can be done. The regulator will continue to work with the companies while keeping the option of initiating a formal investigation into the cloud sector open.