The proposal is not a fine. It is not a final decision either. It is a consultation, open until 13 November 2026, and Microsoft has already said it disagrees. Still, the document is specific enough to show what the regulator is worried about, and the answer matters well beyond Britain.
The proposal in plain terms
The CMA wants to designate Microsoft with Strategic Market Status under the Digital Markets, Competition and Consumers Act. In British law that label applies to firms with substantial and entrenched market power in a digital activity. It lets the regulator write conduct requirements for the company rather than wait for a specific complaint to be proven in court.
Microsoft would be the third firm designated this way, after Google and Apple. The investigation opened on 14 May 2026. The formal proposal came on 16 October. A final decision is due by 13 February 2027.
The numbers behind the case are large. UK customers spent more than $7 billion (roughly €6 billion) on Microsoft products in 2025. The company says it and its 34,000 UK partners contribute over £38 billion to the British economy. Those are Microsoft's own figures, cited in the regulator's materials, and they cut both ways: they describe a supplier that British organisations depend on.
Bundling, and the Teams precedent
Much of the CMA's interest sits in how products are packaged together. When one company sells an operating system, an office suite, a chat tool, a security product and an AI assistant, the price of each item is hard to compare with what a competitor charges for one piece.
There is precedent. In 2024 Microsoft began selling Teams separately from its Office suites worldwide, after the European Commission raised concerns about the tie-up. The CMA's indicative roadmap now points at similar questions for AI interoperability and for security products folded into the same subscriptions.
Copilot is part of that picture. It is sold as an add-on and included in some Microsoft 365 plans, which means many organisations meet generative AI not as a decision they made but as a line in a licence renewal.
Microsoft's response
The company disputes the proposed designation. Its argument, as reported by PYMNTS, is that its products are open and interoperable and that it faces strong competition. That is the same position Microsoft has taken in Brussels and Washington for several years.
Where Europe already stands
European readers have a parallel regime to watch. Under the EU's Digital Markets Act, Microsoft already appears on the Commission's gatekeeper list for Windows and LinkedIn. The DMA gave Brussels powers over how gatekeepers combine services, and the Teams unbundling was a direct result of that pressure.
There is a second layer now. Since 2 August 2026, transparency obligations under Article 50 of the EU AI Act apply, and general-purpose AI providers answer to a finalised Code of Practice overseen by the EU AI Office. In practice, an assistant like Copilot has to be clear that a user is dealing with AI, and generated content has to be marked. Those duties sit on the provider, not on the customer.
For a Czech or German company buying licences, the difference between the two regimes is mostly procedural. Brussels acts through the DMA and the AI Act. London would act through conduct requirements written for one firm. Both can change what appears in a renewal quote.
Egress fees and 12 January 2027
One part of this debate has already produced something concrete. Microsoft and Amazon Web Services have waived data-transfer fees for customers leaving their cloud platforms, a practice that used to make switching expensive. Regulators on both sides of the Channel pushed for it.
In the EU the change is written into law. The Data Act requires cloud providers to remove switching charges by 12 January 2027. If your organisation is weighing a move away from a hyperscaler, that date is the one to put in the calendar. It is a fixed obligation, not a voluntary gesture.
What happens before February
The consultation runs to 13 November 2026. The CMA then has until 13 February 2027 to decide whether the designation stands. If it does, the conduct requirements would be drafted afterwards, with another round of consultation.
Nothing changes for a Microsoft 365 customer this month. No price moves, no licence terms shift. What the proposal does show is where regulators think the pressure points are: subscriptions that bundle an operating system with an office suite and an AI assistant, and switching costs that are measured in inconvenience rather than in fees.
Does this affect home users of Microsoft 365?
The CMA's investigation is about Microsoft's business software ecosystem, and the figures it cites concern businesses and public sector organisations. Consumer subscriptions are not the focus of the proposed designation.
Would a UK decision change anything in the EU?
Not automatically. The DMA and the AI Act are separate legal regimes. In practice, though, Microsoft has tended to apply product changes globally rather than per country, as it did when it separated Teams from its office suites in 2024.
Can I comment on the proposal?
Yes. The CMA accepts responses until 13 November 2026, and the consultation is open to competitors, customers and other interested parties.
