UK watchdog targets Microsoft licensing in cloud competition probe

Steven

UK watchdog targets Microsoft licensing in cloud competition probe

Summary

The UK Competition and Markets Authority (CMA) has launched a strategic market status (SMS) investigation into Microsoft’s business software ecosystem amid concerns that licensing terms for products such as Windows Server and SQL Server favour Azure and hinder rival cloud platforms. The move follows the CMA’s broader cloud market review and targets licensing, egress fees and interoperability as key competition issues.

Microsoft has offered UK-specific remedies: free egress that covers transfers over the Microsoft Global Network (MGN), extending the free egress switch window from 60 to 180 days, broadening the definition of a qualifying “switch” to include exits from individual Azure services, and creating a dedicated interoperability request mechanism modelled on its EU DMA framework. Amazon has likewise highlighted multicloud interconnect options and identity federation tools.

The CMA will start the SMS investigation into Microsoft’s business software in May; it could take up to nine months and the regulator plans engagement with customers and competitors, with a board review of progress in six months.

Key Points

  • The CMA is probing whether Microsoft’s licensing practices create lock-in that disadvantages rival clouds, especially for legacy workloads.
  • Complaints focus on higher costs to run Windows Server and SQL Server on non-Microsoft clouds; Google has argued moves can cost up to five times more.
  • Microsoft pledges UK-only changes: free egress including MGN transfers, a 180-day free-switch period and a new interoperability request mechanism.
  • AWS points to AWS Interconnect multicloud and IAM outbound identity federation as steps towards interoperability and reduced egress charges.
  • The CMA will seek views from UK customers and competitors, review progress in six months and may use SMS powers to impose competition-promoting rules.
  • Industry reactions are mixed: trade groups welcome targeted action, while some UK cloud providers warn excluding AWS could create a regulatory imbalance.

Context and Relevance

This investigation sits within growing regulatory scrutiny of hyperscalers. Licensing, data-transfer charges and interoperability are practical levers that can entrench market power; outcomes here could materially affect migration costs, multi-cloud strategies and how AI-enabled software markets develop. For CIOs, cloud architects and vendors, the results may reshape commercial terms and competitive options.

Why should I read this?

Short version: if you run or move enterprise apps, this could change how much it costs and how easy it is to pick another cloud. The CMA is aiming at the bits that actually lock customers in, and Microsoft’s tweaks might help — or the regulator could force bigger changes. We’ve done the reading so you don’t have to slog through the full probe docs.

Source

Source: https://go.theregister.com/feed/www.theregister.com/2026/03/31/microsoft_cma_probe/