Dive Brief:
- The U.K. Competition and Markets Authority will launch an investigation starting in May of Microsoft’s business software ecosystem, the regulator said in a Tuesday announcement. The CMA seeks to determine whether the company’s use of software licensing hurts competition in cloud as concerns rise about AI adoption entrenching customers with the technology provider.
- If the investigation leads to a strategic market status designation — a label identifying tech companies with substantial market power under the Digital Markets, Competition and Consumers Act — it would let the CMA address Microsoft’s licensing practices and level the playing field as AI is embedded in business software tools, Sarah Cardell, chief executive of the CMA, said in the announcement.
- In response to prior engagement with the CMA, Microsoft and Amazon laid out plans for cloud egress fees and improving interoperability, the agency said. The changes are expected to “reduce expense and effort for U.K. customers when using more than one cloud provider,” according to the CMA.
Dive Insight:
Microsoft’s business software, including its productivity suite, operations systems and database management, is commonplace in modern enterprises. As the company embeds AI across its workplace tools, regulator concerns about vendor lock-in are rising.
AI's implications for productivity, competitiveness and cost savings are significant amid surging adoption, according to the CMA. U.K. businesses will benefit most from an environment “where a broad range of competitors can integrate with Microsoft’s business software, so that business and public sector organizations can mix-and-match AI software across suppliers to best suit their needs,” the CMA said.
In December, Microsoft said it planned to raise commercial pricing for its flagship subscriptions, upping costs by an average of 16% starting in July 2026 as it includes access to more AI tools. Meanwhile, enterprise AI adoption is already propelling significant quarterly cloud revenue growth for the top three providers by market share — AWS, Microsoft and Google, according to a report from analyst firm Omdia.
Microsoft’s cloud revenue alone grew 39% in the fourth quarter of 2025. AWS revenue grew 24% while Google saw nearly 50% growth, according to the companies’ quarterly financial reports.
In response to the U.K. investigation, Microsoft said it is “committed to working quickly and constructively” with the CMA to address its concerns, Vice Chair and President Brad Smith wrote in a blog post on Tuesday.
“The cloud and AI markets continue to change at an unprecedented pace,” Smith said. “The cloud market itself remains intensely competitive, with large investments by Amazon, Google, Oracle and new neocloud entrants.”
Unless regulators require quick changes from Microsoft, the company “will continue to further entrench its dominance in AI just as it has in software and cloud,” Ryan Triplette, executive director of the Coalition for Fair Software Licensing, said in a statement.
“The CMA’s decision is among one of the most significant structural interventions to date, and provides real opportunity for U.K. businesses and the public sector organizations that have absorbed Microsoft’s price increases, navigated its policy changes, and watched their bottom line shrink while their options narrowed,” Triplette said.
Disclosure: Informa owns a controlling stake in Informa TechTarget, the publisher behind CIO Dive and parent company of Omdia. Informa has no influence over CIO Dive’s coverage.
