Britain’s competition watchdog, the Competition and Markets Authority (CMA), has reopened its investigation into Microsoft, focusing on how the company handles cloud software licensing.
The move marks a renewed regulatory push, months after the CMA decided not to act on earlier findings.
This time, the regulator is considering whether to designate Microsoft with “strategic market status” in business software—a classification that would enable closer oversight and potential direct intervention.
Core Issue: Licensing Tied to Cloud Infrastructure
At the centre of the probe is Microsoft’s practice of linking key enterprise software—such as Windows Server and Microsoft 365—to its own cloud platform (Azure). Regulators argue that customers often face additional costs when attempting to run these products on competing cloud services.
This pricing structure, according to the CMA, creates friction for businesses looking to switch providers or adopt multi-cloud strategies, effectively limiting flexibility and increasing operational expenses.
Market Structure Raises Competition Concerns
The UK cloud computing market is highly concentrated, with Amazon (via AWS) and Microsoft each controlling roughly 30–40% of the market. Google trails behind with an estimated 5–10% share.
Earlier CMA findings suggested that this level of dominance could hinder competition, particularly if leading providers leverage their ecosystem advantages across software and infrastructure.
Recent Adjustments—but More Expected
The CMA acknowledged that both Microsoft and Amazon have taken steps to address concerns. These include reducing certain data transfer (egress) fees and improving interoperability between platforms. However, regulators maintain that additional changes are needed.
CMA Chief Executive Sarah Cardell said the authority is taking a “flexible, pragmatic” approach to ensure meaningful outcomes for UK customers, emphasizing that cloud competition remains a priority area.
Industry Response
Microsoft says its recent licensing adjustments are designed to improve customer flexibility, particularly around moving workloads across different cloud environments.
Its Vice Chairman and President, Brad Smith, stated that the changes aim to reduce friction and allow customers to “move, deploy, and operate their workloads” more freely.
Amazon also reiterated its commitment to customer choice, highlighting support for multi-cloud deployments and cross-platform compatibility.
Global Regulatory Momentum
The UK’s renewed scrutiny aligns with broader investigations in the European Union and the United States, where regulators are examining whether major cloud providers are using their dominance in software and infrastructure to stifle competition.
The outcome of the CMA’s probe could have significant implications for how enterprise software is licensed and deployed across cloud environments—not just in the UK, but globally.
