UK’s CMA Proposes Strategic Market Status for Microsoft, Putting Copilot in Play

More than a million British businesses and public bodies use Microsoft’s work software, and on Friday the UK’s competition regulator proposed giving itself the power to set rules for how Microsoft sells it.

The Competition and Markets Authority proposed designating Microsoft with “strategic market status” in business software. Its provisional finding is that Microsoft holds “substantial and entrenched market power” across five lines of software it treats as one: Windows, the Office suite including Copilot, its security products, Windows Server and the SQL Server database. Around 20 million people a month in the UK use them, the regulator said.

The designation comes from the UK’s 2024 digital markets law. It lets the CMA impose conduct requirements, binding rules on how a company deals with customers and rivals, though each rule needs its own consultation first. The regulator says the label carries no finding of wrongdoing.

Comments are open until Nov. 13, and a final decision is due by February 2027. Microsoft would be the third company designated, after Google and Apple last October, Reuters reported. A Microsoft spokesperson told Reuters the company did not share the CMA’s views and that its products, Copilot included, “are open and interoperable, giving customers the ability to use them alongside competing services.”

Where the CMA says it would look first

The CMA’s indicative roadmap names four areas: the terms for running Microsoft software on rival clouds, Copilot, Teams and security software.

The cloud item goes back to July 2025, when a CMA market investigation concluded that Microsoft’s licensing limited customers’ choice of cloud provider. The roadmap says the evidence since then “shows that Microsoft has not altered its licensing practices.” Among the concerns it lists: customers can’t bring Windows Server licences bought after October 2019 to Amazon’s or Google’s cloud.

For Copilot, the options the CMA lists include giving rival AI assistants the same access to company data that Copilot gets, rules on defaults and prominence inside Office, and unbundling Copilot from the existing suites. Microsoft told the regulator that rivals already get “substantially the same access” through its public APIs, the software hooks other programs use to read Microsoft 365 data.

Teams already ran the experiment

In September 2025 the European Commission accepted Microsoft’s commitments to sell Microsoft 365 without Teams and keep a meaningful price gap between the two, changes Microsoft then rolled out worldwide on a voluntary basis.

The CMA says customer evidence so far “does not indicate significant switching from Teams to rivals since Microsoft’s changes.”

In customer research the CMA commissioned, add-on products in Microsoft’s bundles were seen as “already paid for” and so almost “free,” and buying a rival product was “sometimes perceived as paying twice unless the licensing tier can be reduced.” Teams came out of the bundle after customers had already filed it under free.

Copilot is still a line item

The same research found businesses testing Claude, ChatGPT and other assistants. Many picked Copilot for its perceived security and its fit with Microsoft 365, but some who bought it told researchers the return was unclear on what they saw as a high licence cost, and they worried about future price rises.

Rivals told the CMA that free Copilot access nudges users toward paid licences, and that discounted bundle deals, including Microsoft’s E7 tier and multi-year Enterprise Agreements, make it hard to compete.

The CMA can’t write a Copilot rule until it designates Microsoft by February and then consults on the rule itself. Read against the Teams record, an unbundling order has its best odds while buyers still see Copilot as a separate price worth arguing about, and the CMA’s own research has British buyers questioning that price right now.

Sources

• GOV.UK (CMA): CMA takes first steps to ensure choice in business software (Oct 16, 2026)
• CMA: Indicative roadmap for promoting competition in relation to business software (Oct 16, 2026)
• GOV.UK (CMA): Microsoft business software investigation, case page
• Reuters via Yahoo Finance: UK competition regulator targets Microsoft’s business software grip (Yadarisa Shabong, Paul Sandle, Oct 16, 2026)