Microsoft faces a UK regulator probe, again. This time, it's over AI and interoperability concerns in Windows and business apps

The United Kingdom's Competition and Markets Authority (CMA) recently concluded, after a three-year investigation, that neither Microsoft's Azure nor Amazon's Web Services should be designated as having dominant status in the cloud market under the Digital Markets, Competition and Consumers Act (DMCC).

However, the CMA announced it's launching a new Strategic Market Status (SMS) investigation into Microsoft’s corporate software services, including Windows, Word, Excel, Teams, and Copilot (via Neowin).

The watchdog's investigation into Microsoft's software business is expected to start in May. According to CMA CEO Sarah Cardell: "An SMS designation would enable us to tackle remaining concerns around Microsoft’s licensing practices in cloud and would also enable us to ensure a level playing field as AI is rapidly embedded into everyday business software tools."

"Through this package of actions, we’re driving changes across cloud and business software to make sure these markets are competitive and resilient for UK businesses and the public sector."

The software giant has indicated that it's working to address the issues identified by the watchdog “quickly and constructively.”

With the SMS investigation expected to start in May, the CMA will now be able to take action on Microsoft’s use of software licensing to reduce competition in the cloud. Additionally, it would allow the UK watchdog to create a level playing field for competitors in the AI landscape.

The CMA says generative and agentic AI could transform the software industry, but warns the market could close unless Microsoft opens its ecosystem to third‑party AI developers.

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