Britain asks whether rival AI tools can compete from inside Microsoft’s software

Britain’s competition regulator proposed on 16 October to designate Microsoft with strategic market status in business software, opening a route to closer scrutiny of how Copilot competes with other workplace AI. An accompanying roadmap sets out areas for further investigation and possible intervention. The designation remains under consultation, and the roadmap creates no immediate obligation to change products or licences.[1]

The inquiry reaches well beyond a chatbot. It covers productivity suites, PC and server operating systems, security software and relational databases. The CMA says Microsoft’s business software serves more than one million UK businesses and public sector organisations, with about 20 million monthly users. Those established relationships are the setting in which employers now select AI tools.[1]

The competition happens inside the workplace

A hypothetical procurement choice shows the issue. Two assistants might produce equally useful answers in a trial. One is already available where employees read documents and hold meetings; the other requires a separate purchase and another integration project. The second supplier must overcome that extra cost and effort before its model’s abilities enter the comparison. Better answers alone may leave the purchasing decision unchanged.

Microsoft disputes the regulator’s view. Its spokesperson told Reuters that the company’s products, including Copilot, are open and interoperable and can be used alongside competing services.[5]

The roadmap records a more specific disagreement. Microsoft says public APIs give competitors substantially equivalent access to Microsoft 365 organisational data. Rival suppliers question the functionality, fees, placement and stability of that access. The CMA plans to examine how these arrangements operate in practice.[2]

The draft decision already recognises several sales routes. Microsoft 365 Copilot can be an optional addition priced per user; its highest-tier E7 suite includes it. The decision also treats Copilot’s agents, application entry points and organisational-data connections as relevant parts of the productivity offering. A competition assessment must therefore follow the whole arrangement and the choices available to different customers.[3]

Why customers value the same integration that makes switching hard

Research commissioned for the inquiry helps explain the buying problem. Jigsaw conducted 80 hour-long interviews with UK software decision-makers at organisations with at least ten employees and annual Microsoft spending of £7,500 or more; education was excluded. Participants often valued familiar applications and centrally managed security. Some were testing other assistants for specialist work while retaining Copilot for everyday tasks. The interviews are qualitative evidence of experiences and reasoning, not a representative estimate of market-wide adoption.[4]

Removing useful integration would impose its own costs. A successful intervention would preserve the convenience while giving customers a practical way to combine suppliers. That is the trade-off the inquiry now has to resolve.

The next deadline is 5pm on 13 November for consultation responses. The statutory deadline for the designation decision is 13 February 2027. Customers and suppliers therefore have an immediate opportunity to supply concrete evidence about access, purchasing and switching before the regulator decides whether to take its next formal step.[6]

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