The Competition and Markets Authority has opened a Strategic Market Status investigation into Microsoft’s business software and cloud services, marking a significant escalation of the regulator’s scrutiny of the UK cloud market.
The move goes beyond the CMA’s earlier Cloud Services Market report, which identified concerns about barriers to switching providers and limited multi-cloud adoption. Under the SMS framework, introduced by the Digital Markets, Competition and Consumers Act, the CMA can impose binding conduct requirements on firms designated as having strategic market status.
The investigation will examine how software and cloud services are bundled together and whether current licensing practices restrict customer choice. The CMA stated the process could provide “a route to ensuring a level playing field among providers at a critical moment, as AI-driven innovation reshapes competition in productivity software.”
Smaller providers call for enforceable action
It is positive news that the CMA is going beyond its Cloud Services Market report to look further into issues that many organisations have been dealing with for years, such as barriers to switching providers and adopting multi-cloud strategies.
Webb pointed to high data egress fees, restrictive licensing, and limited interoperability as ongoing obstacles. “Businesses of all sizes should be free to run workloads wherever they choose, with providers competing on merit rather than making it commercially or technically difficult to switch,” she said.
For smaller UK-based cloud providers, the investigation carries particular weight. These firms have argued for years that entrenched technical, commercial, and contractual lock-ins put them at a structural disadvantage against hyperscale competitors. Whether the CMA translates its findings into enforceable obligations, rather than further rounds of consultation, will determine whether the SMS process delivers the competitive shift the market has been waiting for.
