Antitrust Law Daily Wrap Up, ANTITRUST NEWS: CMA opens investigation into Microsoft’s software ecosystem, (May 15, 2026)
Organizations Mentioned:Microsoft, Inc.
By Jody Coultas, J.D.
The investigation will assess Microsoft’s position in business software and how this impacts UK businesses and public sector organizations.
The Competition and Markets Authority (CMA) announced that it has launched a strategic market status (SMS) investigation into Microsoft’s business software ecosystem and set out details of what the investigation will cover. This is the fourth SMS investigation opened by the CMA since the UK’s digital markets competition regime came into force in January 2025.
The Digital Markets, Competition and Consumers Act (DMCC), which received Royal Assent in May 2024, imposes new responsibilities on the CMA. The key feature of the scheme is the CMA's designating very large entities as having Strategic Market Status (SMS) regarding a particular digital activity.
Companies that provide services on the Internet are considered for SMS regarding a particular digital activity if the company (1) has revenue turnover of £1 billion in the UK or £25 billion worldwide in the preceding 12 months; (2) wields substantial and entrenched market power; and (3) is postured in a position of strategic significance. By comparison, the turnover threshold for the DMA is €7.5 billion in the European Union in each of the three previous fiscal years.
The CMA may impose specifically-tailored conduct requirements upon the SMS company, requiring particular actions or activities be taken or halted. The CMA may intervene by investigating whether the digital activity is harming competition, and imposing tailored remedies if such a finding is made. The SMS investigation is a five-step process: (1) launch; (2) consultation period; (3) provisional decision; (4) an additional consultation period; and (5) final decision. SMS-designated companies cannot complete proposed mergers if the merger has a UK connection and is valued at £25 million or more until the merger is reported to the CMA, which can then initiate its usual merger review process.
Microsoft investigation. The CMA stated that UK customers may not always be able to effectively combine software from Microsoft with that of other providers, limiting their ability to get access to the best products at the most competitive prices. Therefore, the CMA will investigate whether Microsoft has SMS in business software and consider whether it can use that position to limit customer choice. Also, the CMA will consider whether bundling of products, limits in interoperability or default settings can prevent customers switching and weaken the competitive constraints Microsoft faces from rivals. This includes looking at how AI competitors are able to integrate with Microsoft’s business software, giving customers access to AI software across suppliers to best suit their needs.
The investigation will examine Microsoft’s provision of a range of business software products used by UK organizations, including productivity software, personal computer and server operating systems, database management systems and security software. A SMS designation would also allow the CMA to consider whether to intervene on a key concern from its cloud market investigation – particularly Microsoft’s use of software licensing which was found to be reducing competition in cloud services.
Sarah Cardell, Chief Executive of the CMA, said the aim of the investigation “is to understand how these markets are developing, Microsoft’s position within them and to consider what, if any, targeted action may be needed to ensure UK organisations can benefit from choice, innovation and competitive prices.”
The investigation, which must be completed within nine months, will engage with customers, rivals and challenger tech, as well as gathering evidence from Microsoft before reaching a decision on whether to designate Microsoft with SMS.
Separate investigation. In March, the CMA announced that it is engaging with a broad range of stakeholders to ensure that Amazon and Microsoft are delivering on steps they announced to support customer choice in cloud, and to identify what other action may be needed.
Companies: Microsoft, Inc.
News: Antitrust