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The UK Competition and Markets Authority (CMA) concluded on 31 July 2025 that competition in cloud services was not working well. It found that Microsoft’s software licensing practices weakened AWS and Google Cloud as rivals, alongside broader barriers such as market concentration, costly data transfers and difficulty switching providers. That is a market-investigation finding about effects on competition—not a criminal conviction or a finding that Microsoft is a monopoly. In 2026, the CMA reported progress on egress fees and interoperability and opened a separate investigation into Microsoft’s business-software ecosystem.
What the CMA found
The CMA’s final cloud-services market decision, published on 31 July 2025, identified adverse effects on competition (AECs) in UK cloud markets. Its concerns covered concentrated supply, obstacles to entering or expanding in the market, friction when customers switch providers or use several clouds, and Microsoft’s licensing of certain software.
The market is substantial and growing: UK customers spent £10.5 billion on cloud services in 2024, and spending had grown by nearly 30% a year since 2020, according to the CMA. The CMA’s 2024 market-share estimates below use its UK+EEA market definition, not a UK-only denominator. It published ranges because the underlying data are commercially sensitive.
| Provider | 2024 IaaS supply share | 2024 PaaS supply share |
|---|---|---|
| Microsoft | 30–40% | 20–30% |
| AWS | 30–40% | 10–20% |
| 5–10% | 5–10% |
Source: CMA, final decision summary, 2025; shares are for the CMA’s UK+EEA market definition. IaaS means infrastructure as a service, such as rented computing, storage and networking capacity. PaaS means platform as a service, which provides a managed environment for building and running applications.
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Those figures are not directly interchangeable with Ofcom’s earlier UK-only estimate. In its October 2023 referral, Ofcom reported that AWS and Microsoft together held 70–80% of UK public-cloud infrastructure revenue in 2022, while Google had 5–10%. Ofcom’s referral led to the CMA investigation.
Why the CMA says customers have limited competitive choice
Scale makes it hard for smaller providers to compete
The CMA found IaaS highly concentrated and said forward-looking indicators suggested Microsoft’s and AWS’s leading positions were likely to endure. It also found that both earned sustained returns above their cost of capital. Building data centres, networks and server capacity requires substantial sunk investment; large providers can spread costs over more customers, while smaller providers may struggle to match the breadth of services buyers want.
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Switching and using several clouds can be difficult
Fewer than 1% of customers switch cloud provider each year, according to the CMA’s 2025 decision. Moving data can incur egress fees—charges for transferring data out of a provider’s cloud. The CMA also identified different provider interfaces, latency, skills shortages and limited transparency as sources of technical friction when customers try to use multiple clouds. Together, those obstacles can limit customers’ bargaining power and make it harder for rivals to win business.
Software licensing can change the cost and quality comparison
The CMA examined Microsoft products including Windows Server, SQL Server, Windows 10 and 11, Visual Studio, and productivity suites. It found significant price and/or quality differences when these products are used on Azure rather than AWS or Google Cloud. It also found that some licences are unavailable to rival cloud providers and that existing licences generally cannot be brought to AWS or Google Cloud. The CMA concluded that these practices weakened the competitive constraint AWS and Google placed on Microsoft.
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This finding does not establish that every Microsoft customer pays more, or that one provider is always cheaper for every workload. The CMA’s conclusion concerns how licensing practices affect competition between providers; an individual customer’s costs depend on its software entitlements, services, workload and contract.
Does this mean Microsoft is a UK cloud monopoly?
No. The CMA identified market features and conduct that, in its view, reduce competitive pressure, customer choice and rivals’ ability to expand. Its finding was not a criminal conviction, and the market-share ranges do not show Microsoft alone controlling the market: the CMA put Microsoft and AWS each at 30–40% of 2024 IaaS supply in its UK+EEA definition. The CMA also recorded benefits from cloud-service quality, innovation and discounts. Its decision therefore describes competition problems, not identical harm to every customer.
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What has changed since the 2025 decision?
Cloud commitments and monitoring
On 31 March 2026, the CMA announced a package covering cloud and business software. It said Microsoft and Amazon had taken material steps on egress fees and interoperability following CMA engagement, while warning that more was needed to help UK customers use multiple providers and switch. The CMA said it would continue engagement and review progress after six months. The announcement does not, by itself, establish that all egress or interoperability barriers have been removed.
A separate Microsoft SMS investigation
The March 2026 announcement also launched an investigation into Microsoft’s business-software ecosystem under the UK’s Strategic Market Status (SMS) regime. On 14 May 2026, the CMA published the investigation scope: productivity software, personal-computer and server operating systems, database-management software and security software. The CMA said the investigation must finish within nine months and expected to decide by February 2027 whether to designate Microsoft with SMS.
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SMS designation is not itself a finding of wrongdoing. If the legal tests are met, it would give the CMA powers to consider targeted conduct requirements or pro-competition interventions. The investigation is broader than the cloud-services decision and should not be described as an order requiring Microsoft to change its cloud licences.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Will Microsoft have to change its cloud licensing?
The 2025 market finding identified licensing practices as harmful to competition, but the information available by October 2026 does not establish that the CMA has ordered Microsoft to change those practices. The 2026 SMS process could lead to targeted requirements or interventions if Microsoft is designated and the applicable legal tests are met; its scope and outcome were not yet settled. The separate cloud engagement has focused on egress fees and interoperability, with the CMA monitoring provider progress.
How Microsoft and Google responded
Google Cloud’s February 2025 submission supported the CMA’s provisional view that Microsoft’s licensing practices created an adverse effect on competition. Google argued that Microsoft used its position in software markets to foreclose AWS and Google Cloud. This is Google’s advocacy position, not an independent CMA finding.
Microsoft disputed the provisional analysis, objected to being singled out and argued that UK customers had made few complaints about competition. Those statements are Microsoft’s position; the CMA’s final decision was its own assessment.
What cloud customers can take from the decision
The CMA’s findings are relevant to businesses choosing infrastructure, not a direct forecast of household bills or a guarantee that cloud prices will rise or fall. For buyers comparing providers, the issues identified by the CMA point to concrete questions to settle before committing:
Quick Recap
- Portability: Which Microsoft licences can be used on the chosen cloud, and what would happen to existing licences if the workload moved?
- Exit costs: What charges apply to transferring data out, and how do they change with the volume and frequency of transfers?
- Interoperability: Can the workload operate across providers with the available tools, interfaces and staff skills?
- Contract flexibility: What commitments, renewal terms or technical dependencies could make a later move difficult?
- Workload-specific cost: Compare the full set of required services and licensing terms rather than assuming one cloud is universally cheapest.
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