The Competition and Markets Authority (CMA) has announced it will launch a strategic market status (SMS) investigation into Microsoft’s business software ecosystem in May 2026 to address concerns about the company’s licensing putting restrictions on competition in the cloud.
At the same time, the CMA announced that following engagement with Amazon Web Services (AWS) and Microsoft, the two companies have agreed to make changes to cloud egress fees and product interoperability.
Microsoft and AWS had been the subject of the CMA’s “cloud services market investigation”, which concluded last July and could have seen both companies designated with SMS.
The SMS designation investigation will last nine months. It will target concerns that Microsoft uses its dominant position in software (like Windows Server and SQL Server) to limit competition in the cloud market by making it more expensive or difficult to host these products on rival platforms such as AWS or Google Cloud.
Meanwhile, AWS and Microsoft have agreed to take steps to remove or reduce egress fees – the cost of moving data out of a cloud provider – and improve multi-cloud interoperability, with changes implemented through contract updates. The CMA board will review progress on these “in six months”.
Microsoft and AWS have about 40% of the UK cloud market each, while Google Cloud comes some way behind with 10%.
The CMA stated that while they are keeping all players under review, the specific issues regarding software licensing leverage were unique to Microsoft’s position, and that was why it was the only one subject to potential SMS designation.
The CMA believes a major driver to act now is the rapid emergence of generative artificial intelligence (GenAI) and agentic AI tools. It says the market is currently open, but risks becoming closed if Microsoft’s ecosystem doesn’t allow for seamless interoperability with third-party AI innovators.
Almost simultaneously with the CMA publicising its decision, AWS announced “a new UK addendum” that aims to formalise a commitment to customer choice around multi-cloud adoption, data portability and switching processes.
Not long after that, Microsoft published a blog post in which it set out its commitments to implementing changes set out by the CMA, and detailed measures taken in the areas of multi-cloud interoperability and data egress fees.
The CMA decision was broadly welcomed, but with reservations over just how much “bite” the measures would have, and concerns that outcomes would be rigorously monitored.
