Britain’s Competition and Markets Authority has proposed placing Microsoft under the country’s special digital-market regulatory regime for its business-software ecosystem, potentially giving regulators new powers to address competition involving software, cloud services and artificial intelligence.
The CMA published its provisional decision Friday after opening the investigation in May.
The regulator said Microsoft holds a strong position across personal-computer operating systems, productivity software, security products, servers and database-management software, reinforced by barriers customers can face when switching providers.
The proposed designation is known as strategic market status, or SMS.
It does not represent a finding that Microsoft has broken competition law.
Instead, designation would allow the CMA to consider targeted requirements intended to increase competition and customer choice.
Artificial intelligence has become increasingly important to the review.
Microsoft is embedding Copilot and other AI functionality throughout its software ecosystem as businesses increasingly incorporate generative and agentic AI into existing workplace systems.
The CMA is examining whether customers can freely choose AI tools and whether competitors can effectively challenge Copilot.
The regulator will also examine Microsoft’s bundling of security products and how its licensing practices affect customers’ ability to use competing cloud services.
Microsoft disagrees with the CMA’s assessment and says its products, including Copilot, are open and interoperable with competing services.
The regulator is inviting feedback before making a final decision by February 2027.
Microsoft therefore has not yet been formally designated.
For technology markets, the development represents another example of regulators shifting attention from traditional software competition toward the relationship between established platforms and artificial intelligence.
The next phase will determine whether Britain’s regulator converts those concerns into specific requirements affecting Microsoft’s software ecosystem, licensing practices or interoperability with competing AI products.
