Why Britain's regulator wants special rules for Microsoft's office software

What Microsoft's business software is

Microsoft sells the programs most offices run on: Word, Excel, Outlook, PowerPoint and Teams. It also sells security, server and operating system products and, increasingly, Copilot, its AI assistant.

The Competition and Markets Authority (CMA) is the UK's competition regulator. It says this software is used by over a million businesses and public sector organisations in the UK, with around 20 million monthly users.

On October 16th, 2026 the CMA proposed to give Microsoft "strategic market status" in this business. The proposal is out for consultation. Nothing binds Microsoft yet.

What strategic market status means

Strategic market status is a label the CMA can give under the Digital Markets, Competition and Consumers Act 2024. It describes a position of market power. It does not assume wrongdoing, and the CMA stressed that designation alone changes nothing in the market.

The label matters because of what follows it. A designated firm can face conduct requirements, which are rules on how it behaves, or other pro-competition steps the CMA chooses to take.

Microsoft would be the third company under these powers. Google was designated in online search, and Google and Apple were designated in mobile platforms in October 2025, Reuters reports. In June the CMA imposed conduct requirements on Google's search services.

What the CMA found

The CMA says Microsoft has a strong position in each of five areas: personal computer operating systems, productivity software suites, security software, server operating systems and relational database management systems. It says the strength comes from the barriers customers face when they switch.

If Microsoft is designated, the CMA says it would look first at whether customers can choose AI tools other than Copilot, and at whether Microsoft's bundling of security products limits choice. It would also look at whether customers can choose which cloud their software licences run on.

Sarah Cardell, the CMA's chief executive, said: "Organisations should be able to choose the products that work best for them, switch provider when they want to and combine services from different suppliers."

Cardell and her best-known critic in this case are pictured below.

Sarah Cardell

Chief executive, Competition and Markets Authority

Leads the regulator that made the proposal.

Matthew Lesh

Public policy fellow, Institute of Economic Affairs

Argues the CMA is acting as an overzealous regulator.

What Microsoft and the critics say

A Microsoft spokesperson said the company does not share the CMA's view. Microsoft says its products, Copilot included, are open and interoperable. It argues that it operates in a "vigorously competitive" market, and says its 34,000 UK partners contribute £38bn in revenue to the UK economy, Computer Weekly reports.

Matthew Lesh, a public policy fellow at the Institute of Economic Affairs, a London free market think tank, told Reason the proposal is "attracting intervention pushed by an overzealous regulator".

Others pushed the CMA to act. Computer Weekly reports that more than 30 organisations called on it to designate Microsoft. The Open Cloud Coalition estimated that Microsoft's licensing practices cost the UK public sector around £60m a year. A Computer Weekly analysis of freedom of information responses from 37 English councils found that 32 have never run a competitive procurement in which an alternative to Microsoft could have won.

What to watch, and by when

Figure 1 sets out the dates the CMA has published. The consultation on the proposed decision closes at 5pm on November 13th, 2026. The CMA plans to publish non-confidential responses in November, and Microsoft may make oral representations that month.

The statutory deadline for the final decision is February 13th, 2027. Until then the proposal is provisional. The CMA also says it will publish a further update on cloud services in spring 2027.