UK Competition Regulator Opens Probe Into Microsoft's Business Software Unit

The UK Competition and Markets Authority has launched an investigation into Microsoft's business software unit to assess whether it should be designated with 'strategic market status,' a classification that would subject the company to enhanced regulatory obligations, according to a report by the Financial Times cited by Techmeme on Tuesday. Strategic market status is a designation under the UK's Digital Markets, Competition and Consumers Act, which came into force in 2024. Companies designated with SMS are subject to conduct requirements set by the CMA and face tougher oversight of acquisitions and business practices. The designation targets companies whose market positions the CMA determines give them substantial, entrenched power. Microsoft's business software unit encompasses its Office and Microsoft 365 productivity suite, as well as Teams, SharePoint, and the broader enterprise software stack that dominates workplace computing. The CMA's interest in this unit likely centers on how Microsoft bundles products, its pricing practices, and whether its integration of AI tools through Copilot into existing Microsoft 365 subscriptions creates competitive barriers. The investigation marks the second major UK regulatory action targeting Microsoft in recent months. The CMA previously scrutinized Microsoft's relationship with OpenAI, ultimately deciding not to open a formal merger inquiry but indicating ongoing monitoring of the partnership. Microsoft has faced software bundling scrutiny before, most notably in the EU, where antitrust concerns about Teams being bundled with Microsoft 365 led the company to unbundle the products in Europe in 2023 to avoid a formal investigation. A Microsoft spokesperson said the company would cooperate with the CMA. The investigation does not have a specified conclusion date.