Microsoft's Software Licensing Terms Under Investigation by UK's CMA

A UK CMA panel has found that Microsoft's software licensing terms harm cloud competitors, with the cloud market highly concentrated among Amazon Web Services, Microsoft Azure, and Google. The panel recommends conduct requirements on Microsoft and Amazon to boost competition. The CMA may open a probe into the companies in 2026.

The UK Competition and Markets Authority (CMA) has concluded that Microsoft's software licensing terms are adversely affecting competition in the cloud computing market. The CMA's panel found that the cloud market is highly concentrated, with Amazon Web Services (AWS) and Microsoft Azure commanding up to 40% of UK customer spending, while Google Cloud trails in a distant third place [1]. Microsoft's "significant market power," driven by how it charges Amazon and Google to use its software, is deemed to be negatively impacting the market's competitiveness.

The panel recommends that the CMA impose conduct requirements on Microsoft and Amazon to boost competition. The CMA will consider whether to open a probe into these companies, which could result in them being designated with "strategic market status" (SMS), a designation that would impose certain conduct requirements [2]. However, any such probe would not start until 2026, as the CMA has focused on its current investigations into Google and Apple over search and mobile ecosystems this year.

Microsoft's Azure cloud computing unit reported soaring profits, with global revenues rising 34% to a record $75bn in the year to June. The CMA's findings suggest that the current market structure may need to be adjusted to ensure fair competition and prevent any one company from dominating the market.

The CMA has published a summary of its final decision in its market investigation into cloud infrastructure services. The full report is expected to be published later today. The investigation has recommended that the CMA prioritize SMS investigations, particularly for Microsoft and AWS, to address the competitive concerns identified in the market [2].

References:
[1] https://finance.yahoo.com/news/microsoft-software-rules-harming-cloud-101819713.html
[2] https://www.gov.uk/cma-cases/cloud-services-market-investigation