British watchdog seeks tougher terms around Microsoft's dominance of business software

The UK's competition watchdog wants to designate Microsoft with strategic market status (SMS) in business software, allowing the regulator it to intervene to level the playing field, and says it is considering other areas for investigation.

Regulators around the world are watching to see what the UK decides in this case, with bodies such as the US Federal Trade Commission (FTC) and the European Commission mulling similar actions.

The Competition and Markets Authority (CMA) is opening a consultation on whether to tag the Redmond software giant with strategic market status in respect of its portfolio of business software applications.

This follows an investigation the regulator started back in May into Microsoft’s software portfolio including Word, Excel, Outlook, PowerPoint and Teams, plus its security, server and operating systems.

The watchdog is also probing whether Microsoft enjoys a position of “substantial and entrenched market power” through the suite of software that could be seen as stifling competition and harming buyer choice.

It lays out its proposed decision in a document [PDF] and is inviting comments that must be submitted by November 13.

The CMA will make its final decision by February 13, 2027.

Bargain spotter The CMA makes it clear the company holds a strong position in each of the five areas it investigated (personal computer operating systems, productivity software suites, security software, server operating systems and relational database management systems), and that customers face barriers when switching providers – limiting their choice and weakening the ability of other software developers to offer rival products.

Its proposal document notes Microsoft has been by far the largest provider of business software in the UK for decades.

It finds that many customers view Microsoft's portfolio as a unified software environment, forming an end-to-end, integrated stack which makes for easier technical integration between products, with discounted pricing for buying whole bundles of applications together.

This makes customers less likely to adopt products from alternative providers that may offer similar or superior functionality, as doing so would duplicate licensing costs for products already in their Microsoft bundle, the CMA says.

“Organizations should be able to choose the products that work best for them, switch provider when they want to and combine services from different suppliers.

We want to ensure businesses have the freedom to choose how they use Microsoft’s products alongside alternatives,” said CMA chief exec Sarah Cardell.

Finding that the criteria for SMS designation are met would not imply or assume wrongdoing on Microsoft’s part, the regulator stresses.