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CMA challenges Microsoft's grip on AI-embedded business software

ended 03. April 2026

The Competition and Markets Authority announced on 1 April 2026 that it will launch a Strategic Market Status investigation into Microsoft's business software ecosystem starting in May. The move follows a 2025 cloud investigation that found Microsoft and Amazon hold significant market power, with licensing practices that make switching providers expensive and difficult for UK firms.

Here's what changed on the ground: both Microsoft and Amazon agreed to reduce egress fees — the charges that punish businesses for moving data between cloud providers and improve interoperability. The CMA accepted these steps but flagged that more is needed, and will review progress in six months.

The SMS probe matters because of timing. AI tools like Copilot are being embedded directly into Word, Excel, Teams, software hundreds of thousands of UK organisations already rely on. If Microsoft's licensing terms make it costly or impractical to mix Microsoft's AI with competitors' tools, businesses lose the ability to choose what works best for their needs. They're locked in by contract structure, not by product quality.

The practical consequence for UK businesses: if the CMA designates Microsoft with SMS, it can impose enforceable conduct requirements. That could mean clearer pricing, fairer licensing terms for using Microsoft software on rival clouds, and the ability to integrate third-party AI without hidden penalties or technical barriers.

The risk the CMA is naming: dominance in productivity software plus aggressive AI integration equals a market where one company decides what "normal" looks like, and everyone else either pays the premium or tries to build their own preferred solution around the edges.

We'd like your views:

  • If Copilot becomes standard in Microsoft 365, should rival AI assistants have guaranteed technical access to the same workflows and data structures, or is that asking Microsoft to design for its own competition?
  • When a business uses Microsoft software but wants to run it on a competitor's cloud, who should carry the cost of making that technically feasible, Microsoft, the cloud provider, or the customer? What does that mean for tech markets.
  • The CMA says businesses should be able to "mix and match" AI tools across suppliers. In practice, does integration complexity mean most firms will stick with one provider anyway, regardless of licensing terms?
  • If tighter regulation slows Microsoft's AI rollout in the UK, does that protect competition or just delay useful tools reaching the businesses that need them?
  • Amazon and Microsoft lowered egress fees voluntarily after CMA engagement. Should regulators wait for negotiated compliance before formal action, or does that reward only the firms large enough to bargain directly?

3 responses from the Newspage community

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Colette Mason
AI Ethics Consultant at Clever Clogs AI
The CMA just announced it'll force licensing practices into the open before AI assistants lock in like browsers did in 1998.

In the late 1990s, Microsoft bundled Internet Explorer with Windows and made it hard to remove. Netscape had the better product, but Microsoft controlled distribution. The US sued in 1998. By 2001, IE held 95% share. The pattern repeats: own the platform, bundle the add-on, make switching costly.

Now Microsoft is embedding Copilot into Office 365, Windows, Teams, the CMA isn't waiting. Its May investigation will examine whether Microsoft's licensing locks businesses into Microsoft's AI on Microsoft's cloud.

Sovereignty makes this sharper. When IE crashed, you lost a session. When your business runs on cloud-hosted Office and AI becomes inseparable from productivity. Switching means migrating contracts, workflows, data, training. When moving is punitive, businesses stay, not because Microsoft's AI is best, but because leaving is so hard. Intervention is needed.
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David Belle
Founder and Trader at Fink Money
'If you're too good at what you do, you will be investigated.'

Regulators are a curse and completely the antithesis of business.
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Rohit Parmar-Mistry
Founder at Pattrn Data
The real competition question behind “AI in productivity suites” is simple: who controls the workflow, the data shape, and the switching costs. If that control sits with one vendor, you do not have a market, you have a toll road.

“Mix and match” only works if three things are true: interoperable data models, transparent pricing, and licensing terms that do not punish you for running the same software on a different cloud. In our AI audits, the hidden risk is rarely model quality. It is contractual lock-in that turns every future change into a programme.

Regulators do not need to force Microsoft to build rivals’ products, but they can require fair access to interfaces, portability, and predictable terms. Otherwise Copilot becomes the default because it is bundled, not because it is best.

On who pays for portability, customers will always pay something. The job of regulation is stopping artificial friction that makes portability irrational. Competition is a feature, not a bug.