One million businesses, 20 million users, and a regulator asking whether you can actually leave
What happened
On 16 October 2026, the Competition and Markets Authority said it plans to give Microsoft a label called strategic market status, or SMS, for its business software. That label matters. Under the UK's digital markets rules, a company given SMS can be made to follow specific rules about how it behaves. The CMA has not made the decision yet. It has published what it proposes to do and is now asking for views. A final decision is due by a legal deadline in February 2027. The software in question is the kind most offices run on: Word, Excel, Outlook, PowerPoint, Teams, the Copilot AI tools, and Microsoft's security, server and operating system products. The CMA says these are used by over a million businesses and public sector organisations in the UK, with around 20 million users a month. The CMA investigated five areas: operating systems for personal computers, productivity software suites, security software, server operating systems, and relational database management systems. Those last two are the software that runs behind the scenes in company computer systems. Its provisional finding is that Microsoft holds a strong position in all five. The CMA says that strength comes from three things. Barriers that make switching hard, which limit customer choice. Commercial practices. And advantages from the way Microsoft's products are built to work together, which rival developers struggle to match. Alongside this, the CMA published what it calls an indicative roadmap: a list of areas where it might gather more evidence and consider stepping in. Three stand out. Whether customers can freely choose which AI tools they use, and whether rival AI providers can compete fairly with Copilot. Whether the way Microsoft bundles and builds in its security products limits choice. And whether customers really have a choice about which cloud service hosts the software they have paid for. Sarah Cardell, the CMA's Chief Executive, said organisations should be able to choose the products that work best for them, switch providers when they want to, and combine services from different suppliers.
Why this matters
This is not really a story about software. It is a story about being stuck. Most people have felt a small version of it. You have years of files in one place, your email is linked to it, your work colleagues all use the same thing, and moving would mean redoing a great deal. So you stay, even if something else might suit you better. Now scale that up to a hospital trust, a council or a school. The cost of switching is not just money. It is retraining staff, moving records, and risking something breaking. The CMA's point is that when switching is hard enough, choice stops being real. You technically can leave. In practice you will not. That has a direct effect on the public. When the NHS, councils and schools buy software, they are spending public money. If they cannot shop around properly, they pay more than they otherwise would, and the difference comes out of budgets that could be doing something else. There is a second reason this is timely, and it is artificial intelligence. AI tools are being built into the software people already use. If the AI that comes bundled with your office software is the one you end up using, simply because it is already there, then rival AI companies never get a fair hearing, however good their product is. The CMA has put that question first on its roadmap, which tells you how seriously it is taking it.
What the evidence actually says
It is worth being precise about what has and has not been decided, because this kind of story is easy to overstate. The CMA's findings are provisional. That is its own word. It has not concluded anything finally. The SMS label is also not a finding of wrongdoing. The CMA says so explicitly. Being designated means a company is big and important enough in a market that specific rules can be applied to it. It does not mean it has broken the law. If Microsoft is designated, the CMA could then impose targeted measures, such as conduct requirements or what it calls pro-competition interventions. Those have to meet legal tests. None of them exist yet. The CMA has not published market share figures in this announcement, so anyone quoting a specific percentage is not getting it from here. Running alongside this is separate work on cloud services, which the CMA has been handling outside the formal designation process. Since March, Microsoft and Amazon Web Services have made changes. They have connected their data centres to rivals, starting with Google. They have removed the fees charged when customers move data to another provider. They have reduced fees for using more than one cloud. They have set up a way for competitors and customers to ask for better interoperability, and rolled out tools that automate some of the steps in switching. The CMA's verdict on all that is short: more is needed. It has agreed with both firms to focus next on identity and access management across different clouds, and on making cloud systems portable without unnecessary barriers. It is keeping open the option of a full SMS investigation into cloud services, and will give a further update in spring 2027. So the honest summary: real changes have already happened on cloud, driven by regulatory pressure rather than a court ruling, and the regulator does not think they go far enough yet.
Practical advice
Most readers are not buying enterprise software. But a few things here are useful to anyone. If you run a small business or a community organisation, it is worth knowing what it would take to leave your current software before you need to. Where are your files actually stored? Could you export them? Is your email address tied to the provider? Answering those three questions now is much easier than answering them in a hurry. Keep your own copies of anything important. Exporting a copy of your key documents and contacts, stored somewhere separate, protects you against far more than a competition problem. If you are choosing new software, ask about getting out as well as getting in. What does it cost to export your data? Is it in a standard format other software can read? Salespeople are rarely asked this, and the answer tells you a lot. If your organisation uses cloud services, the fee changes described above are real and may already apply to you. Charges for moving data between providers have been removed by Microsoft and AWS. If your contract or your assumptions still include them, it is worth checking. And if you want to influence the outcome, the CMA is consulting now. Consultations are open to anyone, including small businesses and members of the public, and the details are published on the CMA's pages on GOV.UK.
What to know
On 16 October 2026 the CMA proposed designating Microsoft with strategic market status for its business software, and opened a consultation. The final decision is due by February 2027. Microsoft's business software is used by over a million UK businesses and public sector bodies, with around 20 million monthly users. The CMA provisionally finds Microsoft strong in all five areas it examined. Designation is not a finding of wrongdoing, and the findings are provisional. No specific rules have been imposed. The CMA's roadmap focuses on AI choice and fair competition with Copilot, bundled security products, and whether customers can genuinely choose where their software licences are hosted. Separately, Microsoft and AWS have already made cloud changes including removing data transfer fees for switching. The CMA says more is needed and will update in spring 2027. Sources: GOV.UK (Competition and Markets Authority), "CMA takes first steps to ensure choice in business software", 16 October 2026, https://www.gov.uk/government/news/cma-takes-first-steps-to-ensure-choice-in-business-software ; GOV.UK, Competition and Markets Authority, https://www.gov.uk/government/organisations/competition-and-markets-authority This article is for general information. It is not legal, financial or procurement advice, and it does not replace guidance from a qualified professional on contracts your organisation is bound by.
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