The UK’s Competition and Markets Authority (CMA) has revealed Amazon Web Services (AWS) and Microsoft have made progress in addressing barriers to competition in cloud services, but more needs to be done to give businesses greater choice.
The watchdog said it is continuing discussions with both companies to secure further improvements. As a result, it is also proposing to designate Microsoft as having strategic market status (SMS) in the UK’s business software market.
According to the company, the proposed designation could pave the way for closer scrutiny of Microsoft’s business practices, including how it bundles products, integrates services and licenses software for use on rival cloud platforms.
However, the CMA will consult on the proposal before making a final decision.
According to the regulator, Microsoft holds a strong position across five key areas: PC operating systems, productivity software, security software, server operating systems and database management systems.
The CMA said customers face difficulties switching providers, while Microsoft’s commercial practices and the way its products work together can make it harder for competing software developers to attract users. As part of its proposed next steps, the watchdog will examine whether businesses have enough freedom to choose where they run their software, particularly when using cloud services from competing providers.
It will also assess whether Microsoft’s software licensing arrangements discourage customers from using alternative cloud platforms.
Another area of concern is artificial intelligence, with the CMA looking at whether businesses can freely choose AI tools from different suppliers or face barriers when using alternatives to Microsoft’s Copilot.
CMA CEO, Sarah Cardell, said: “Business software and cloud services underpin workplaces across the UK, from small firms to vital public services. The evidence shows Microsoft has a long-standing and significant presence in the UK’s business software market.
“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. We want to ensure businesses have the freedom to choose how they use Microsoft’s products alongside alternatives.
“We’re now consulting on whether to designate Microsoft with strategic market status. If we do, our focus would be on promoting competition and giving businesses greater freedom to choose and combine products in business software.”
She added: “We’ve also been engaging with AWS and Microsoft outside a formal designation process to deliver greater customer choice in cloud services. Meaningful improvements have already been made, with more to come and we’re continuing to work with both companies to agree further actions.”
Meanwhile an Amazon spokesperson continued: “We welcome the outcome of the Competition and Markets Authority’s (CMA) review, which recognises the concrete steps AWS has taken to enhance customer choice and flexibility in the UK.
“As outlined in our recent blog, we’ve continued to invest throughout 2026 in new AI, multi-cloud, and open-standard capabilities that give customers more control over how they build and operate, to help the UK’s innovation economy thrive.”
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