Microsoft Faces Second Major UK Investigation Over Cloud Licensing Practices
Microsoft is facing a fresh regulatory challenge in the United Kingdom, with the Competition and Markets Authority (CMA) set to launch a new investigation into the tech giant's cloud licensing practices following concerns that the company is using its dominance in business software to disadvantage rivals.
The development follows the CMA's landmark cloud services market investigation, which concluded in July 2025 and found adverse effects on competition in the UK cloud market. That inquiry, which ran for nearly two years after a referral from telecoms regulator Ofcom, examined practices by Microsoft and Amazon Web Services (AWS) that were found to make it difficult for businesses to switch between cloud providers.
Background: The CMA's Cloud Investigation
Ofcom first raised concerns about the UK cloud market in April 2023, identifying practices including "egress fees" — charges for moving data out of a cloud provider's ecosystem — discounts that incentivised customers to remain with a single provider, and technical barriers to switching. Microsoft and AWS were found to control between 70% and 80% of the UK's public cloud infrastructure market.
The CMA's market investigation, launched in October 2023, examined these concerns in depth. Its July 2025 conclusion recommended that the CMA use its new digital markets powers to consider designating Microsoft and AWS with Strategic Market Status (SMS) in relation to their cloud services — a designation that would subject them to binding conduct requirements.
The New Investigation
The latest probe focuses specifically on Microsoft's software licensing practices, with concerns that the company makes it more expensive to run its applications — including widely used products such as Microsoft 365 and Teams — on rival cloud platforms. This effectively ties customers to Microsoft's own Azure cloud service, critics argue, stifling competition and raising costs for UK businesses.
The CMA board was expected to make a decision on which Strategic Market Status investigations to prioritise in the first quarter of 2026, with Microsoft and AWS the primary candidates. The new investigation signals that regulators are prepared to use the full force of the UK's new digital markets regime to address concerns about the dominance of major cloud providers.
Why It Matters
UK businesses of all sizes rely heavily on cloud services, and the cost and ease of switching providers has significant implications for competition and innovation across the economy. If Microsoft is found to have engaged in anti-competitive licensing practices, it could face binding remedies that fundamentally change how it prices and packages its software for UK customers.
What's Next
Microsoft has previously defended its licensing practices, arguing that its products offer genuine value and that customers have meaningful choices. The company is expected to engage with the CMA's investigation process. A final decision on any SMS designation and associated remedies could take several years, but the investigation itself will place significant scrutiny on Microsoft's UK business practices in the interim.
