About 20 million people in Britain use Microsoft’s business software every month. That figure is why the country’s competition regulator proposed on October 16 to designate the company’s commercial software ecosystem as holding strategic market status, a finding that would open the door to mandatory changes in how its products are sold.
The Competition and Markets Authority identified five core markets for the assessment, including personal computer operating systems and office productivity software. The regulator said the designation would allow it to intervene in the way Excel, Teams, Outlook and Copilot are bundled together. Consultation on the proposal closes on November 13.
Strategic market status is the CMA’s central instrument under the digital markets regime that took effect in 2025. It is deliberately different from a finding that a company broke the law. The designation establishes that a firm has substantial and entrenched market power in at least one digital activity, and it allows the regulator to write conduct requirements tailored to that firm rather than pursuing case-by-case enforcement through the courts.
Bundling is the specific behavior in view. Microsoft has attached Teams to its business software subscriptions, included Copilot in the higher tiers of its productivity packages, and designed the Windows operating system so that its own services are present by default. Rivals in messaging, collaboration and AI assistants argue that the arrangement means their products compete against a bundle that customers have already paid for.
The company’s position has been consistent since the European Commission opened its own examination of Teams bundling. Microsoft has offered to sell some components separately, has adjusted terms for smaller competitors and has argued that integration benefits customers who want one supplier and one support contract. The CMA’s proposal suggests that those concessions have not answered the structural question.
The 20 million figure carries the regulator’s argument. A market that size is not marginal, and the products involved are used for work rather than entertainment, which means switching decisions are made by employers and IT departments rather than by individuals. The costs of switching sit with the organization, and the benefits are diffuse, which is the combination that digital markets regulation was written to address.
Artificial intelligence raises the stakes. Copilot is the product Microsoft has used to move from selling software licenses to selling assistance inside those applications, and its position inside Excel, Word and Outlook gives it distribution that a standalone assistant cannot match. A remedy that requires the company to offer Copilot separately would change the economics of its AI business.
Smaller vendors have argued that access to the operating system matters more than any single application. Features that notice what a user is doing, that integrate with file systems or that appear inside the task switcher are governed by interfaces the platform owner controls. Copilot’s placement inside Windows is the clearest example, and it is the one most difficult to remedy without directing product design.
The cloud side of the same announcement was more tentative. The CMA said Amazon Web Services and Microsoft could do more to remove barriers that make it costly for customers to switch providers, and it left a decision on whether to begin a formal investigation in the cloud market under assessment, with the next update scheduled for spring 2027. That timing means any cloud action will follow the software case rather than accompany it.
The company has not said how it will respond. Its past practice has been to engage with the process, offer limited changes and contest the characterization of its market position, while arguing that its competitors in cloud and AI are larger or better funded in the segments where it is weakest. That argument is harder to make about office productivity software, where its share has been stable for two decades.
Analysts said the practical effect depends on the conduct requirements that follow a designation. A requirement to offer products separately, to give rivals equivalent access to interfaces, or to change default settings would each carry compliance costs and would each be tested in court. The CMA has used the framework sparingly since it took effect, and this would be its most significant application to date.
Businesses that buy the software have said little in public, and their interests are not aligned with either side. A large employer wants predictable licensing and one place to call when something breaks, and it also wants competition among suppliers of collaboration and AI tools. The regulator’s consultation is one of the few forums where those preferences are recorded, and the responses filed by November 13 will be read as evidence about what customers actually want.
What the proposal does not do is impose any obligation today. It opens a consultation, and the regulator will decide after November 13 whether to proceed, what activities to cover and what the company must do. The answers will determine whether Britain’s digital markets regime becomes a template for jurisdictions that have watched it develop, or a procedure that produces findings without remedies.
