UK regulator wants to grant Microsoft dominant status in business software market

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CMA investigation finds that Microsoft has "a strong position" across five separate areas

An ongoing investigation is also considering whether Copilot has an advantage

Microsoft could have to make changes to licensing and improve interoperability

The UK's Competition and Markets Authority (CMA) is proposing to give Microsoft a Strategic Market Status (SMS) designation in the business software market as a result of an earlier investigation into its software practices and impact on competition.

Core to the investigation was the company's extensive software ecosystem, which customers reportedly find difficult to leave to switch providers.

According to the data, around 20 million people use Microsoft's software in the UK every month, including private businesses and public sector organizations.

CMA proposes labelling Microsoft with SMS in the UK

"Microsoft has a strong position across each of the 5 areas of digital activity that the CMA investigated," the CMA wrote . Those five areas include operating systems, productivity software, security software, server operating systems and database management systems.

The report slates Microsoft for using barriers to prevent customers from switching as well as other "commercial practices and integration advantages" that keep users tied to the broader ecosystem.

If Microsoft is deemed to have Strategic Market Status, the CMA would likely want the company to make a series of changes, including changes to its bundling and licensing practices. The Authority would also likely want to see improvements to interoperability so that customers could mix and match software.

Copilot is another integral part to the investigation, and the CMA is working to determine whether Microsoft's existing market power could also give an unfair advantage in favor of its Copilot AI.

"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," CMA CEO Sarah Cardell wrote.

The CMA has also been working with Microsoft outside of the formal designation process to reach a resolution.

"All our products - including Copilot - are open and interoperable, giving customers the ability to use them alongside competing services and choose solutions that work best for them at attractive prices," a Microsoft spokesperson said.

"We will continue engaging constructively to ensure UK customers and businesses carry on benefiting from robust competition."