CMA launches Microsoft probe amid software licensing concerns

The Competition and Markets Authority (CMA) has launched an investigation into Microsoft’s software licensing practices due to competition concerns.

A strategic market status (SMS) investigation will begin in May and see the regulator examine the tech giant’s licensing practices in relation to Microsoft 365.

The business software suite includes a host of popular applications, including Word, Excel, and Teams.

Sarah Cardell, chief executive of the CMA, said an SMS designation would allow the regulator to “tackle remaining concerns around Microsoft’s licensing practices” and “ensure a level playing field as AI is rapidly embedded into everyday business software tools”.

An SMS designation is a label applied by the regulator to technology providers that hold a disproportionate influence on certain markets - in this case, business software.

AI interoperability in the crosshairs

Notably, the regulator specifically highlighted the emergence – and interoperability – of AI tools such as Copilot as a key focus of the probe.

This aspect of the investigation comes amid the rapid adoption of AI tools by public and private sector organizations across the UK. Microsoft, in particular, has positioned its Copilot services as a core application in its business software estate.

“The implications are significant for UK productivity, competitiveness, and value for money across the private and public sector,” the CMA said in a statement.

“The UK will benefit most where a broad range of competitors can integrate with Microsoft’s business software, so that businesses and public sector organizations can mix-and-match AI software across suppliers to best suit their needs.”

Microsoft, Amazon cloud licensing changes

The launch of the probe comes after Microsoft and Amazon both agreed to address competition concerns surrounding cloud services.

The two hyperscalers have been subject to a long-running investigation by the regulator over their dominant positions in the UK cloud computing market.

Key issues such as interoperability and “egress fees” – which place high costs on customers transferring data to other services – were highlighted in the probe.

Last year, the CMA concluded the duo’s dominance actively harmed competition in the country’s cloud computing market – a ruling that prompted a fierce reaction.

“Both firms are taking material steps to lower egress fees and improve interoperability, including as reflected in announcements the firms are issuing today,” the CMA said in a statement.

“These actions create benefits for UK businesses, enabling greater scope for multi-homing to support customer choice and the resilience of UK tech stacks.”

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