The UK's CMA finds that Microsoft's software licensing terms harm competition in the cloud market, may open a probe into Microsoft and Amazon in 2026
Watchdog finds UK cloud market ‘not working well’ and recommends conduct requirements for Big Tech — Microsoft's software licensing terms …
Context & Ripple Effects
This finding extends a UK cloud-competition review that began with Ofcom’s referral after it identified possible limits on competition among the largest providers. The CMA had already provisionally concluded that the market was not working well for customers in its earlier provisional cloud-market assessment.
The new emphasis on Microsoft’s licensing terms also tracks prior complaints: Amazon told the CMA that Microsoft’s practices restricted cloud customer choice after Google raised similar concerns in an earlier complaint over customer choice. The significance is that a broad market review is being translated into a specific theory of harm and potential conduct rules.
First-order effects
- Microsoft’s software-licensing practices become the central target for possible CMA conduct requirements, increasing compliance and commercial uncertainty around how its software is used across cloud environments.
- Amazon faces the prospect of a separate 2026 CMA probe alongside Microsoft, while cloud customers gain a regulator-backed basis to challenge terms that may constrain provider choice.
Second-order effects
- Rival cloud providers can use the CMA’s findings to compete for workloads tied to Microsoft software, while Microsoft may face pressure to make licensing terms less restrictive before any formal requirements take effect.
- Large cloud buyers will likely place greater weight on portability and licensing flexibility in procurement, strengthening their leverage in negotiations with hyperscalers.
Third-order effects
- If conduct requirements or investigations follow, UK cloud oversight could shift from judging market concentration alone to policing the contractual and software-licensing mechanisms that reinforce it.
- The case may become a test of whether targeted rules can lower switching barriers in hyperscale cloud markets without requiring structural remedies; the eventual scope of any intervention remains uncertain.
The trend: Cloud regulation is moving from diagnosing hyperscaler concentration toward scrutinizing the licensing and commercial terms that can make customer switching difficult.