Britain's competition regulator launched a formal investigation into Microsoft on May 14, 2026, targeting the bundle of products that most UK organisations run their daily operations on: Windows, Word, Excel, Teams, and Copilot. The investigation will run for roughly nine months, with a decision expected by February 2027.
The probe is being run under the UK's Digital Markets, Competition and Consumers Act, a law that came into force in January 2025. That law gives the Competition and Markets Authority the power to label dominant technology companies as having "strategic market status" — a formal designation that acknowledges a company holds deep and entrenched control over a market. Once labelled, a company faces binding rules on how it must behave, enforced with fines of up to 10% of global annual turnover for serious non-compliance.
This is the fourth investigation of this type the CMA has opened. The first targeted Google's search business. Microsoft is now in the crosshairs specifically because the regulator has heard that UK customers often cannot effectively combine Microsoft software with tools from other providers, leaving them trapped paying whatever Microsoft charges.
The AI angle is where this gets consequential. Microsoft has been quietly moving Copilot from an optional add-on into the core of every product it sells. The CMA is specifically asking whether that integration makes it harder for competing AI tools — from companies like Google, Anthropic, or smaller startups — to get a fair foothold. This mirrors the EU's earlier case over Teams, where bundling a collaboration tool inside Office was found to have crushed competitors like Slack and Zoom before they ever got a real chance.
That EU case is instructive. Microsoft agreed in 2025 to sell versions of its Office suite without Teams attached, and to improve how rival tools connect with its software. By most accounts it changed very little in practice. The real power had already shifted: Microsoft's advantage is no longer just about what is bundled in the box. It is about the fact that all of an organisation's documents, emails, meetings, and now AI interactions are sitting inside Microsoft's data infrastructure, making the cost of switching enormous regardless of what is or is not bundled.
Meanwhile, Microsoft is raising prices. Base plan costs are increasing from July 1, 2026 for commercial, government, and nonprofit customers globally. For organisations running a mid-sized enterprise deployment, the annual bill is heading upward by meaningful amounts. The CMA's licensing investigation has direct bearing on whether UK customers will have any practical leverage to resist those increases by credibly switching to alternatives.
Australia's competition regulator sued Microsoft in late 2025 over Copilot bundling, alleging it misled around 2.7 million subscribers by telling them they had to accept a price increase to keep their subscription, without disclosing that a cheaper option existed. That case points to a pattern regulators are now tracking globally: AI features get added to existing subscriptions, prices go up, and customers who rely on the software have little realistic ability to say no.
For any organisation renewing Microsoft contracts in the next twelve months, this investigation is background context worth holding. The CMA is actively soliciting input from businesses, including those outside the UK, about their experiences with Microsoft licensing. If the designation comes through in February 2027, the rules that follow will likely set the template for how other regulators in Europe and beyond treat Microsoft's AI bundling strategy going forward.