UK regulators are coming for Microsoft’s empire – and they’re starting with Copilot
UK competition authorities are ramping up scrutiny of Microsoft’s vast business software empire, launching a formal investigation into its ecosystem that explicitly eyes the rapid integration of AI tools like Copilot into everyday workplace software.
On Tuesday (31 March), the Competition and Markets Authority (CMA) announced a package of measures targeting cloud services and productivity software, where Microsoft holds a commanding position.
The main focus is a Strategic Market Status (SMS) investigation into Microsoft’s business software ecosystem, set to begin in May 2026.
The move builds on the CMA’s 2025 cloud market investigation, which concluded that Microsoft, alongside Amazon Web Services, wields significant market power.
Regulators flagged concerns over data egress fees, interoperability barriers that hinder switching or multi-cloud strategies, and Microsoft’s licensing practices that allegedly make it harder for rivals to compete when customers want to run Microsoft software on non-Azure clouds.
AI adds new urgency
What makes the latest announcement notable is its forward-looking focus on AI.
The CMA highlighted how Microsoft is embedding AI assistants and “agentic” technologies, including Copilot, into core tools like Windows, Office (Word, Excel, Teams), and security services.
Hundreds of thousands of UK businesses and public sector organisations rely on these products daily.
AI advances are pivotal, the release noted, warning that without intervention, Microsoft’s dominance could shape competition in productivity software for years to come.
The regulator wants to ensure a “level playing field” so competitors can integrate their own AI offerings with Microsoft’s stack, allowing UK organisations to mix and match tools rather than face lock-in.
CMA Chief Executive Sarah Cardell said the actions aim to deliver “real impact, as quickly as possible” for UK customers while getting ahead of emerging AI-driven issues.
“We’re not just responding to today’s concerns but getting ahead of emerging issues too,” Cardell said. “An SMS designation would enable us to tackle remaining concerns around Microsoft’s licensing practices in cloud and would also enable us to ensure a level playing field as AI is rapidly embedded into everyday business software tools.”
Microsoft’s concessions – and what’s next
In response to CMA engagement, Microsoft has already outlined steps to lower cloud egress fees and improve interoperability for UK customers.
The authority said it will monitor implementation closely, review progress in six months, and seek input from businesses and competitors on whether more needs to be done to enable multi-homing (using multiple clouds) and easier switching.
If designated with Strategic Market Status, the CMA could impose binding conduct requirements or pro-competition interventions. The investigation itself is expected to last up to nine months, with a provisional view issued earlier.
The announcement comes amid broader global scrutiny of Big Tech, including Microsoft’s cloud and AI practices. In the UK, public sector reliance on Microsoft tools has drawn particular attention, as switching costs and licensing terms can make alternatives expensive or technically challenging.
