UK Regulator Probes Microsoft While Backing Voluntary Cloud Rules

On March 31, 2026, the UK's Competition and Markets Authority (CMA) announced the outcome of a three-year investigation into the cloud computing market. Rather than pursuing the binding regulatory designations its own investigation board had recommended, the CMA accepted voluntary commitments from Amazon Web Services and Microsoft on egress fees and interoperability, while simultaneously opening a new investigation into Microsoft's corporate software services under the Digital Markets, Competition and Consumers Act (DMCCA).

The decision departs from recommendations made by the CMA's own investigation board, and has prompted debate about whether the regulator is doing enough to address structural competition problems in a sector that increasingly underpins both the internet and AI infrastructure.

Cloud computing, the provision of off-premises processing and storage as a service, is dominated by three companies: Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. AWS, which launched the commercial cloud market in 2006, retains the largest share; Azure ranks second; Google Cloud is a smaller but growing competitor. That concentration shapes much of the internet's underlying infrastructure, a dependency made visible during major outages. It is also evident, as articulated by researchers, that this dominance extends into AI, noting the "interdependence of AI with the infrastructure, resources, and investments of these major technology companies.”

Investigating the Cloud

The UK has been considering intervening in the cloud sector since at least 2023, when Ofcom, the UK’s communication regulator, published a market study into the cloud sector, which concluded that the CMA should investigate the sector, as they found that features of the market were constraining competition. The CMA began a market investigation shortly after, and a final recommendation was published in July 2025. The market investigation recommended that the CMA “consider designating the two largest providers, Microsoft and AWS, with strategic market status (SMS) in relation to their respective digital activities in cloud services.” Under the Digital Markets, Competition and Consumers Act (DMCCA), enacted in 2024, the CMA can designate large companies as having Strategic Market Status, which gives it the power to impose conduct requirements on them, effectively prohibiting or obligating certain conduct.

The CMA's 600-page report identified several competition concerns. High capital costs for building data centers create structural barriers to entry. Technical fragmentation, "the differentiation of features and interfaces in cloud services," inhibits customers from comparing, substituting, or integrating services across providers. OVHcloud told the CMA that such barriers are "the most important obstacle to switching or multi-cloud because they are resource-intensive to overcome." Staff training lock-in compounds this. Businesses whose IT teams are trained on one environment face significant internal costs when switching. Egress fees, charges levied when data leaves a provider's infrastructure, further discourage migration.

Another barrier to switching is the “broad product portfolios of Microsoft, AWS and Google,” which offer a variety of connected services along with their cloud offerings. This is particularly important in the case of Microsoft, which can tie its productivity software, like the Microsoft Office 365 Suite, to the cloud, giving it a significant lead. Indeed, the US Federal Trade Commission under the previous US administration opened an investigation into Microsoft’s licensing terms, including how tying its productivity software to the cloud may be contributing to a lock-in effect for users. The CMA also found that Microsoft charges more for its software when distributed via AWS and Google Cloud compared to prices charged on its own Azure cloud.

The report also raised the issue of public procurement. The CMA found that “Microsoft and AWS appear to be the largest providers to the public sector, and this is consistent with their overall position in cloud services markets.” For example, Microsoft and the UK Crown Commercial Service have agreed to a five-year contract to secure discounted access to Microsoft’s 365 Office suite, the Azure cloud platform, Business Applications, and 365 Copilot. Public contracts are lucrative and can provide significant investment to smaller businesses to expand and improve their services. Indeed, smaller cloud providers were consistent in reporting that public procurement presents a competitive barrier, with some arguing that contracts were not fairly put out to tender, and that the largest cloud providers have unfair access to business leaders, politicians and senior civil servants.

The CMA’s Board announced on March 31, 2026, three years after the investigation began, that it would take two separate actions. First, the CMA has accepted non-binding commitments from Amazon and Microsoft regarding “cloud egress fees and interoperability” to encourage multicoming. Second, the CMA will launch a Strategic Market Status investigation into Microsoft’s corporate software services, but not Amazon.

What Microsoft and AWS committed to

The CMA stated that interventions should include removing or reducing egress fees and making it easier to “set up and manage the network and security requirements to run applications across clouds and to facilitate control of these applications (for example via a single interface).” It was also suggested that it should be easier to connect applications across clouds or move between clouds, and that public documentation on cloud products is complete and standardized. In addition to the commitment to remove or reduce egress feeds, interoperability commitments include the introduction of products “that directly connect their datacentres to one another” and to Google Cloud, “with scope for further connections with other clouds to be considered.” AWS and Microsoft will also create a clear process for businesses to apply for interoperability tools, will adopt standards for AI agents to connect to their respective cloud products, and they are taking steps to manage applications across clouds. There will be a six-month review of their progress.

Several commitments reflect obligations already introduced by the EU’s Data Act, which will eliminate switching fees from 2027, and ban cloud providers from maintaining “technical, contractual and organizational obstacles’ to switching to another provider. Large cloud providers have reduced egress fees in response. AWS and Microsoft have also committed to extending to the UK any standards that promote multicloud and switching developed in the EU.

The EU is also currently conducting a market investigation into AWS and Microsoft to consider designating them under the EU’s digital competition regulation, the Digital Markets Act (DMA), as well as considering if the DMA is fit for that purpose. A major gap left untouched by the Data Act includes the broad product portfolios that bundle cloud with a variety of connected services, creating significant lock-in. This is an area that the DMA could intervene in, and appears to be the focus of the launched DMCCA investigation against Microsoft. The EU’s investigation is likely to conclude before the UK’s, which is a nine-month investigation commencing from May. It is significant how much the DMA has impacted proposed conduct requirements so far, with the CMA regularly stating that it aims to align with, but not go further than, the DMA. Therefore, it is possible that the regulators pre-emptively align outcomes, with each investigation influencing the other.

The Microsoft investigation

The CMA outlines that the Microsoft Strategic Market Status designation investigation will focus on the company’s “productivity software, operating systems, database management and related security services.” The decision report suggests that Microsoft has not made improvements to improve customers' ability to switch or multicloud since the 2025 market investigation, justifying intervention. This may mean the investigation could break Microsoft's ability to tie its services together.

Notably, the investigation will also consider how embedded “advanced AI (including assistants and emerging agentic technologies) into familiar workplace tools” impacts competition in “productivity software.” This reflects the CMA’s ambition to prevent lock-in before it has cemented, recognizing the unfair advantage that dominant players have in vertically integrating generative AI into dominant platforms and services, a major distribution advantage.

The decision places very high importance on “advanced AI as a key driver of productivity growth across the UK economy and the importance of genuine choice for UK customers, as well as the opportunity at hand for challenger providers.” Though likely overstating generative AI’s productivity claims, the decision makes it very clear that the investigation is in line with the UK’s AI Opportunities Action Plan, a strategy pursued by the UK government to boost economic growth through adopting generative AI in public institutions and encouraging wider adoption.

Concerns over CMA’s weak approach to tech

Commentators have broadly welcomed the Microsoft investigation but expressed disappointment at the decision not to pursue an SMS designation for Microsoft and Amazon, as was previously recommended. The non-profit The Balanced Economy expressed dismay at the overall length of such multiple investigations, particularly as they have ended with voluntary commitments, which they argue historically tend to be “overly general and difficult to enforce.”

This comes on top of concerns regarding the independence of the CMA itself. Since the replacement of CMA Chair Marcus Bokkerink with ex-Amazon Doug Gurr, much more attention has focused on the agency, which is seen as generally softening its approach. The CMA has not blocked any mergers throughout 2025, and many are underwhelmed at the progress of the DMCCA in general, with the mobile ecosystems investigation also opting for “weak” voluntary commitments, which depart significantly from the original market investigation. The CMA is also under increased pressure to adhere to the UK government's pro-growth mandate, which largely attaches its ambitions to ties with Big Tech.

Gurr recused himself from the case, citing a potential conflict of interest. Reporting by Jade-Ruyu in Tech Policy Press suggests that concerns extend beyond his Amazon background to his broader approach to enforcement. The CMA has defended the use of voluntary commitments as a means of resolving the most urgent issues expeditiously, a position that carries some weight given the investigation's three-year duration, but one that has done little to reassure critics who argue the agency's enforcement posture has weakened.