UK Targets Microsoft's Cloud Dominance in Second Antitrust Probe

(P1) Britain's Competition and Markets Authority will launch a second major investigation into Microsoft Corp.'s cloud and software business, examining whether the tech giant's licensing practices stifle competition. The probe, set to begin in May, will assess if Microsoft qualifies for a "strategic market status" designation, a move that would grant the regulator power to make targeted interventions in its business.

(P2) "Cloud remains central to our approach," CMA chief executive Sarah Cardell said in a statement. She noted the regulator was acting in a "flexible, pragmatic way to deliver real impact, as quickly as possible for UK customers" and expects more action from Microsoft and Amazon over the coming months.

(P3) The investigation follows a 2025 inquiry that found the dominance of Amazon and Microsoft, which together control between 60 percent and 80 percent of the UK cloud infrastructure market, was harming competition. Google holds a smaller share of 5-10 percent. In response to the earlier probe, both Microsoft and Amazon have agreed to make it easier for customers to switch providers and reduce certain fees, including data egress charges.

(P4) Achieving "strategic market status" would empower the CMA to impose remedies on Microsoft without a lengthy market investigation, potentially forcing changes to how it bundles products like Office 365 and Windows with its Azure cloud platform. The move reflects a broader global push to rein in Big Tech, with similar antitrust investigations underway in the European Union and the United States.

Software Licensing at the Core

The heart of the CMA's concern is Microsoft's use of its entrenched position in enterprise software to gain an unfair advantage in the cloud market. The regulator has previously singled out licensing terms that make it more expensive for customers to run Microsoft products, such as Windows Server and the Microsoft 365 productivity suite, on rival cloud platforms like Amazon Web Services and Google Cloud.

This new probe will likely examine the bundling of services including the Teams chat app and the AI-powered Copilot assistant, which the CMA fears could further limit consumer choice and cement Microsoft's market power.

A Pattern of Scrutiny

This is not the first time Microsoft has been in the CMA's crosshairs. The regulator has recently examined the company's multi-billion dollar partnership with OpenAI and its move to hire key staff from AI startup Inflection AI, signaling a growing unease in the UK with Microsoft's expanding influence across the technology sector.

The repeated investigations suggest the CMA is building a comprehensive case against the company's practices. For investors, the outcome of this latest probe represents a significant risk. A finding against Microsoft could result in substantial fines and mandated changes to its lucrative software licensing model, potentially impacting the growth of its Azure cloud division, which competes directly with Amazon's AWS and Google's Cloud Platform. Shares of Microsoft (MSFT) were little changed on the news.

This article is for informational purposes only and does not constitute investment advice.