Most organisations that submitted comments to the Competition and Markets Authority (CMA) – including Google, the Lloyd’s Market Association, Amnesty International and the Startup Coalition – have called on it to designate Microsoft’s business software ecosystem as having Strategic Market Status (SMS).
That’s according to 32 responses published by the CMA – and presented in an extended analysis by Computer Weekly – alongside the regulator’s invitation to comment that reveal a huge ratio in favour of intervention by those that commented.
The submissions, which will inform the CMA’s nine-month investigation under the Digital Markets, Competition and Consumers Act 2024, sees competitors, enterprise users, industry coalitions and public sector bodies largely align on the idea that Microsoft’s integration of productivity software, operating systems, identity management, security and artificial intelligence into a single stack constitutes a form of market power that existing competition law cannot discipline.
The Open Cloud Coalition, a 27-member industry body, estimates that Microsoft’s licensing practices cost the UK public sector around £60m per year and more than £300m over the course of a Parliament. Meanwhile, in the submissions, an anonymous provider of artificial intelligence (AI) services, citing Gartner data, notes that Microsoft 365 holds a 77% share of software-as-a-service (SaaS) enterprise productivity, £1.9bn was spent by the UK public sector on Microsoft software licences in the 2024-25 financial year, and “98% of councils in England are utilising Microsoft solutions as the standard”.
In the education sector, Jisc – the UK’s digital agency for tertiary education – reports that 74% of institutions say moving away from Microsoft, either wholly or partially, is not a viable option. Some 53% operate entirely on Microsoft 365 A5 licences, while 62% reported increased Microsoft spending over the previous year. Jisc argues that the CMA should consider whether alternatives to Microsoft exist, but also whether alternatives are viable once Microsoft has “become embedded across multiple layers of institutional operations”.
Every month of deliberation is a month in which the market conditions change. A remedy that arrives late arrives weakened The Startup Coalition
The role of AI emerges as a central concern. The Startup Coalition, representing more than 4,000 UK tech startups, argues that “AI is not a separate market sitting alongside the ecosystem; it is being embedded into every layer of it”. The coalition warns that if Microsoft’s own AI agents are embedded across the entire stack, thousands of UK startups will be structurally disadvantaged.
Meanwhile, Killinghall Parish Council – nine councillors, one clerk, 10 users – reports paying £1,100 a year for a Microsoft ecosystem it never planned to buy, having discovered that full Teams functionality depends on purchasing Microsoft-hosted email accounts. The Lloyd’s Market Association, representing 55 managing agents, states that “engagement with Microsoft operates on a ‘take it or leave it’ basis”, with regulated financial services firms unable to negotiate bespoke terms.
Virgin Media O2 reports concern that “bundling and pre-enabled settings” create hidden costs and self-preferencing that limit competitive procurement.
Three anonymous enterprise respondents describe lock-in ranging from proprietary formats and pre-paid bundles forcing long-term dependence to AI integration threatening to “further lock in customers by tying value to proprietary workflows”.
Microsoft’s submission contests the investigation’s premises at every level. The company argues that it operates in a “vigorously competitive” environment across five distinct digital activities, pointing to Google Workspace, macOS, Linux, PostgreSQL and Okta as evidence of contestability.
On AI, Microsoft contends that “AI is dramatically lowering the barriers to building high-performing enterprise software”, citing Gemini’s 900 million monthly active users and ChatGPT’s 900 million weekly users as proof that entrenchment claims are inconsistent with market reality. It also notes that its 34,000 UK partners contribute £38bn in revenue to the UK economy.
Not all respondents are convinced the investigation should be a priority. The Movement for an Open Web argues that “business software does not appear to be the CMA’s highest priority digital market issue and the CMA has not explained why this has become a priority”. It calls for comparative assessments of Amazon Web Services and Google Cloud if competition concerns are to be addressed.
The CMA’s statutory nine-month window places a final decision in early 2027. Scida, an academic consortium, recommends that the regulator initiate “conduct requirement” studies in parallel with the SMS investigation to avoid the timing gap that has characterised previous market interventions.
The Startup Coalition distils the urgency. Its submission says: “Every month of deliberation is a month in which the market conditions change. A remedy that arrives late arrives weakened.”
