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The UK’s Competition and Markets Authority (CMA) is proposing to designate Microsoft with strategic market status (SMS) in business software, putting the way Windows, Office/Microsoft 365 and Defender work together under formal scrutiny. This is a proposed designation, not an order to split the products.
The CMA opened consultation on 16 October 2026. Responses are due by 13 November 2026, and the authority says it plans a final decision by 13 February 2027. Until then, Microsoft remains free to operate its current product structure, subject to existing law and any separate proceedings.
What the CMA is investigating
The CMA says Microsoft has a strong position in five investigated areas, including personal-computer operating systems, productivity software suites and security software. Windows, Office/Microsoft 365 and Defender sit directly in those layers. The proposed SMS designation would give the CMA powers to impose conduct requirements if it concludes that Microsoft’s position creates competition problems.
In its 16 October announcement, the CMA said: “Commercial practices and integration advantages can incentivise customers to adopt Microsoft’s products, creating additional barriers that other software developers cannot easily overcome.” Read the CMA announcement.
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The issue is not integration on its own. The CMA is examining whether bundling, default settings, licensing terms and technical connections make it harder for organisations to choose rival products, combine services from different suppliers or switch away without excessive cost and effort.
Why Windows, Office and Defender are linked in the inquiry
Bundling and commercial incentives
Windows is the operating system on many business PCs; Office or Microsoft 365 supplies productivity applications and cloud services; Defender provides security capabilities across Microsoft environments. Selling or administering these products together can offer convenience, but it may also encourage customers to take more Microsoft services than they would select independently. The CMA is assessing whether those incentives disadvantage competing productivity, operating-system or security providers.
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Default settings
Defaults influence which applications, identity services and security controls users encounter first. The CMA’s consultation specifically asks whether customer choice may be limited by default settings. A default can be changed in principle, but the practical questions are how visible the alternative is, whether administrators can change it centrally and whether doing so removes functionality or creates support work.
Interoperability and multi-vendor use
Businesses often need email, documents, identity, endpoint protection and specialist software from different suppliers. The CMA is testing whether Microsoft’s technical interfaces and commercial terms let customers combine those tools effectively. Interoperability problems can show up as duplicated administration, missing security signals, incompatible policies or data that is difficult to move.
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What “strategic market status” means at this stage
SMS is a designation under the UK digital-markets regime for firms with substantial and entrenched market power in a particular digital activity. A designation would not automatically require Microsoft to separate Windows, Office or Defender. The CMA would need to complete the process and then decide what conduct requirements or other remedies are appropriate.
| Date | Event | What it means |
|---|---|---|
| 16 October 2026 | Proposed SMS decision and consultation opened | The CMA has set out a provisional view and invited evidence; no final designation or remedy has been made. |
| 13 November 2026 | Consultation response deadline | Customers, competitors and other interested parties can submit views through the CMA process. |
| By 13 February 2027 | Planned final decision | The CMA says it intends to decide whether to designate Microsoft, subject to its assessment and any changes to the timetable. |
See the proposed decision consultation and the CMA’s case page for the latest timetable and documents.
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How widespread the decision could be
The CMA says more than one million businesses and public-sector organisations across the UK use Microsoft business software, representing around 20 million monthly users. That scale means any future conduct requirements could affect procurement, IT administration and software design well beyond large technology companies.
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The authority also says resilience matters for government and critical organisations. Its release describes the ability to choose, switch and combine digital services, particularly AI services, without being overly dependent on one provider as important to strategic autonomy. This is a policy concern about concentration, not a finding that every Microsoft customer is unable to use alternatives.
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What the cloud investigation adds
The CMA’s 2025 cloud-services market investigation found that Amazon and Microsoft held positions of significant market power. In a 31 March 2026 announcement, it identified egress fees, interoperability barriers and Microsoft software-licensing practices as limits on customer choice. That earlier cloud work helps explain why the regulator is looking at software links through the same digital-markets framework rather than treating Windows, productivity tools and security products as isolated markets. Read the cloud and business-software announcement.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Integrated stack or modular stack: what organisations should evaluate
An integrated Microsoft stack can coordinate identity, policy and security administration. A modular, multi-vendor design can preserve choice and reduce dependence on one supplier, but it may require more integration work. Neither outcome is guaranteed; the right assessment is specific to an organisation’s systems, contracts and risk tolerance.
| Decision area | Questions for an integrated stack | Questions for a multi-vendor stack |
|---|---|---|
| Interoperability | Can third-party email, productivity, identity and security tools use documented interfaces and retain required features? | Who owns integration, testing and support when suppliers change an interface or policy? |
| Switching and migration | How easily can identities, documents, policies, logs and endpoint data be exported? | What migration tooling, data formats and professional services are required to move between vendors? |
| Licensing dependence | Would a price or packaging change force adoption of additional Microsoft services? | Do separate contracts create overlapping licences or volume discounts that disappear at smaller scale? |
| Defaults and administration | Can administrators change defaults without breaking workflows or security controls? | Can one team enforce consistent settings across products from several suppliers? |
| Security coordination | Are alerts, policies and response actions shared across Windows, Defender and productivity services? | Can competing security tools receive complete telemetry and act quickly enough during an incident? |
| Resilience | What is the operational impact of a Microsoft-wide outage or account lockout? | Does supplier diversity reduce concentration risk without creating weak links between systems? |
| Total cost | Include subscription tiers, add-ons, training and the cost of changing defaults. | Include integration engineering, duplicate capabilities, support contracts and staff time. |
Practical checks to run before standardising
- Map dependencies. List every Windows, Office/Microsoft 365 and Defender feature in use, including identity, device management, data-loss prevention, email protection and compliance workflows.
- Test a rival product in a controlled group. Measure whether users can work with existing documents, identities, calendars, devices and security policies without losing required functions.
- Measure exit effort. Request export procedures, data formats, retention behavior and licensing terms for a full migration, then estimate staff time and professional-services costs.
- Review defaults and contracts. Record which settings are imposed by policy, which can be changed, and whether discounts or bundles make a competing component commercially impractical.
- Run an incident exercise. Confirm that a non-Microsoft security product can receive telemetry, quarantine devices and preserve audit evidence if Microsoft controls are unavailable.
- Set review triggers. Reassess the architecture after major licensing changes, acquisitions, interface changes or outages rather than treating the initial choice as permanent.
What happens next
The consultation can change the CMA’s provisional conclusions. The authority must then decide whether Microsoft meets the SMS test and, if so, which obligations are justified. Possible remedies are not settled in the 16 October proposal, so claims that the CMA has ordered Microsoft to split Windows, Office or Defender are inaccurate.
Organisations do not need to wait for the final decision to examine vendor dependence. Documenting interoperability, migration, licensing, administration, security coverage and resilience now provides evidence for procurement decisions and for any response an organisation chooses to submit before the consultation deadline.
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