CMA launches investigation into Microsoft amid cloud contract crackdown
The UK’s competition watchdog has launched a new probe into Microsoft’s business software ecosystem, as part of a wider push to loosen the grip of Big Tech on cloud, and boost competition for British firms.
The Competition and Markets Authority (CMA) said it will open a strategic market status investigation in Microsoft’s suite, including Windows, Office, teams and Copilot.
Starting in May, the move marks a significant escalation in the regulator’s scrutiny of the company.
It also lands alongside commitments from both Microsoft and Amazon to address key, recurring competition concerns around cloud services, like interoperability and so-called ‘egress feees’: the costs businesses face when moving data between providers.
The CMA said these steps should make it easier and cheaper for UK businesses and public sector organisations to use multiple cloud providers, a practice also known as ‘multi-cloud’/
“We’re using the regime in a flexible, pragmatic way to deliver real impact, as quickly as possible, for UK customers”, said Sarah Cardell, chief executive of the CMA.
“This announcement shows we’re not just responding to today’s concerns but getting ahead of emerging issues too.”
AI and software dominance under scrutiny
The new investigation centres on concerns that Microsoft’s dominance in business software is reinforcing its position in cloud computing, especially as AI tools become embedded across workplace platforms.s.
The CMA said an SMS designation would allow it to address concerns around Microsoft’s licensing practices, which it says may be restricting competition in cloud services and limiting customer choice.
The watchdog has already found that Microsoft and Amazon hold “significant market power” in cloud infrastructure, with barriers like high switching costs and limited interoperability making it harder for rival firms to compete.
Following the CMA’s review, both companies have now committed to changes aimed at lowering their ‘egress fees’, and improving compatibility between cloud platforms.
The regulator said these steps should make it easier for organisations to adopt multi-cloud strategies, though it warned further action may still be needed. Progress will be reviewed in the next six months.
Microsoft said the changes form part of a broader effort to address the regulator’s concerns and support customer choice.
In a statement, the company said it is introducing updates to its Azure cloud services that will allow UK customers to “move, deploy, and operate their workloads in the clouds of their choice with confidence, flexibility, and ever-reduced friction.”
It added: “We are committed to working quickly and constructively to address these issues… and look forward to an ongoing dialogue in relation to relevant cloud issues in the future.”
The tech giant also pushed back on suggestions of limited competition, arguing that “the cloud market itself remains intensely competitive”, pointing to investment from rivals including Google and Oracle.
But, as Mark Boost, head of Civo, said: “If the CMA is serious about delivering on this, it will need to adopt an integrated approach as opposed to only partially regulating these hyperscalers”.
“If the same standards are not applied to both parties, the UK will jeopardise its objectives related to digital sovereignty and economic stability”.
The CMA’s intervention follows a recent survey by the Open Cloud Coalition, which found more than 70 per cent of UK providers support urgent regulatory action, with many citing restrictive licensing and interoperability barriers as obstacles to competition.
Nicky Stewart, OCC senior advisor said: “The SMS investigation into Microsoft’s business software ecosystem must proceed without delay.”
“We also urge the CMA to take swift action should Microsoft and AWS fail to meet their commitments on egress fees and interoperability, and to ensure those commitments are meaningful.
The regulator said its approach under the UK’s Digital Markets Competition Regime is to act “quickly and proportionately” to ensure markets remain competitive as cloud and AI technologies evolve.