UK Reopens Probe Into Microsoft Cloud Licensing Rules

The UK’s competition regulator, the Competition and Markets Authority (CMA), has announced a fresh investigation into Microsoft’s software licensing practices in the cloud computing market, reigniting concerns over fair competition.

The move comes months after the regulator previously chose not to take immediate action, despite findings that suggested market dominance by major players was impacting competition.

Background of the Investigation

Last year, a CMA inquiry highlighted that Amazon and Microsoft collectively hold a dominant position in cloud computing services, including processing, storage, and networking. Together, the two companies account for an estimated 30–40% market share each, while Google trails behind with around 5–10%.

The report specifically raised concerns about Microsoft’s licensing practices, stating that the company may be leveraging its enterprise software ecosystem—such as Windows Server and Microsoft 365—to limit competition. This includes charging additional fees when customers run its software on rival cloud platforms.

Regulator’s New Approach

The CMA stated that the renewed investigation will focus on Microsoft’s broader business software ecosystem. This could lead to the company being designated with “strategic market status,” allowing the regulator to introduce targeted measures to ensure fair competition.

CMA Chief Executive Sarah Cardell emphasized a practical and results-driven approach, noting that the regulator aims to deliver tangible benefits for UK customers quickly. She added that progress has already been made, particularly in reducing data transfer (egress) fees and improving interoperability between cloud platforms.

Global Scrutiny Intensifies

The UK is not alone in examining the cloud sector. Antitrust regulators in both the European Union and the United States are also investigating potential anti-competitive practices in the rapidly growing cloud computing market.

Company Responses

Microsoft stated that it has been working with the CMA to implement changes, particularly around data migration costs, switching flexibility, and interoperability. The company said these measures are designed to give customers greater freedom in choosing cloud providers.

Amazon also highlighted its efforts to support multi-cloud adoption, data portability, and easier switching between platforms, reinforcing its commitment to customer choice.

Market Impact

The CMA noted that both Microsoft and Amazon have already taken “material steps” to reduce certain cloud-related fees following earlier discussions. However, further actions are expected in the coming months as regulatory scrutiny intensifies.