The UK’s antitrust watchdog has opened a formal probe into Microsoft’s dominance in enterprise software — a development that could have ripple effects across tech markets, including cloud services relied on by crypto firms and startups.
What’s happening
- The Competition and Markets Authority (CMA) said it is investigating whether Microsoft’s licensing practices for Azure, Office and its Copilot AI assistant are squeezing out rivals. In particular, regulators are focused on whether terms make it prohibitively expensive for customers to run Windows Server or SQL Server on competing clouds such as AWS or Google Cloud, and whether Copilot is being unfairly bundled into existing business tools.
- Microsoft President Brad Smith said the company will “cooperate constructively” with the probe.
Why it matters
- The CMA’s review puts recent Microsoft software moves under legal scrutiny and could trigger short-term volatility in Microsoft’s (NASDAQ: MSFT) stock, according to market commentary. The timing is sensitive: MSFT just posted its worst quarterly performance since 2008, leaving investors already nervous.
- Past regulatory tussles have pressured Microsoft before, but voluntary cooperation and concessions have often been the company’s strategy to avoid heavy fines or structural remedies — for example, in negotiations over cloud egress fees.
What analysts say
- Market watcher Watcher Guru expects the CMA inquiry to be a manageable, non-critical issue for the company. Their view: the probe — which typically takes around nine months to complete — is unlikely to derail Microsoft’s roughly $30 billion quarterly cloud revenues or materially change long-term stock prospects. Watcher Guru reiterated a buy call on MSFT in March and suggested the current weakness could be a buying opportunity.
Bottom line
The CMA probe ramps up regulatory pressure on Microsoft at a fragile moment for the stock, but historical precedent and voluntary cooperation make severe outcomes less likely in the near term. Investors will be watching the nine-month inquiry for any changes to licensing practices or remedies that could reshape cloud competition.
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