Microsoft Faces UK CMA Investigation in May 2026 Over Cloud and AI Dominance

The UK’s Competition and Markets Authority (CMA) is preparing to launch a formal investigation into Microsoft in May 2026, targeting the company’s business software ecosystem and its growing influence across cloud and AI-powered tools.

The probe will assess whether Microsoft should receive a Strategic Market Status (SMS) designation, a classification that would grant regulators stronger powers to intervene in how the company operates within the market.

Focus on Windows, Office, Teams, and Copilot

The investigation will cover Microsoft’s core enterprise products, including Windows, Microsoft Word, Microsoft Excel, Microsoft Teams, and Microsoft Copilot. According to the CMA, hundreds of thousands of organizations across the UK rely heavily on these tools for daily operations.

Regulators are particularly concerned about Microsoft’s software licensing practices, which may give the company an advantage over competitors in the cloud space. The CMA believes certain licensing terms could make it harder for rival providers to compete fairly, especially when businesses attempt to integrate alternative cloud services.

Cloud Competition and Licensing Under Scrutiny

A major part of the investigation will focus on how Microsoft structures its licensing across cloud and software offerings. The CMA is evaluating whether these practices restrict competition or discourage customers from using competing platforms.

If the CMA determines that Microsoft holds Strategic Market Status, it could impose rules designed to ensure fairer access and interoperability. This may include forcing changes to licensing terms or requiring Microsoft to open up parts of its ecosystem to competitors.

AI Integration Raises New Regulatory Questions

Artificial intelligence is expected to play a central role in the investigation. The CMA sees Microsoft’s rapid integration of AI, especially through Copilot features across its software stack, as a transformative shift in the business software landscape.

Regulators aim to ensure that competing AI providers can integrate with widely used Microsoft products. The goal is to allow businesses to combine different AI solutions rather than being locked into a single ecosystem.

Builds on Previous CMA Cloud Scrutiny

This move follows earlier scrutiny of Microsoft’s cloud business in 2025, where concerns around competition and licensing were already raised. The upcoming investigation signals a deeper regulatory push into how Microsoft’s ecosystem operates as a whole, particularly as AI becomes more embedded in enterprise tools.

Broader Microsoft Developments Continue

The investigation comes as Microsoft continues expanding its AI offerings. The company recently introduced Copilot Cowork through its Frontier program and is working on integrating GPT-5.2 into declarative agents within Microsoft 365 Copilot.

At the same time, Microsoft Teams is set to receive a new chat-based workflow creation feature, aimed at simplifying automation directly within conversations.

Via Neowin