Britain’s regulator has praised Microsoft’s products as practical, secure, and good value for money. Ironically, that praise is now treated as a problem.
Successful tech firms are being penalised simply for their success.
Earlier this week, the UK’s Competition and Markets Authority (CMA) signalled its intention to grant Microsoft a strategic market status, a label that would endow the competition watchdog with sweeping powers to shape how Microsoft designs and operates its products. A public consultation is underway, with a decision on whether Microsoft will receive the status expected in February 2027.
Should the CMA decide to designate Microsoft as having strategic market status, it could step into areas such as product bundling (the way Teams, Word, Excel, and Copilot are packaged together), interoperability (whether Microsoft should make it easier for rival software and AI developers to integrate with its offerings), cloud licensing (whether Microsoft’s licensing terms put competing cloud providers at a disadvantage), and customer switching (whether firms face undue hurdles when leaving the Microsoft ecosystem) within the United Kingdom.
Strangely, the CMA’s core grievance is that Microsoft has crafted software that is so well integrated, convenient, and commercially appealing to buy as a package that competitors find it hard to persuade customers to switch to alternatives. The CMA says Microsoft provides technology that is practical, secure, easy to deploy and manage, and sold at an attractive overall price. Its own customer research suggests Microsoft is viewed as relatively good value for money, and that its bundles are seen as more cost-effective than purchasing and managing separate licences. Because such commercial bundling “makes customers less likely to adopt products from alternative providers,” the CMA argues it must intervene.
Microsoft isn’t the first tech giant to feel the CMA’s bite for creating popular products. In 2025, the CMA decided that Google had strategic market status in general search and search advertising, thereby granting the regulator the power to impose legally binding requirements on how the company operates. Since then, the CMA has ordered Google to adhere to government-mandated standards for ranking organic search results, to provide competitors with tools to access users’ search data, and to give publishers greater control over how their content is used in AI-powered search. (These requirements were imposed without finding that Google had violated competition law.)
“Products that work well together at an attractive price used to be a selling point,” notes Matthew Lesh, public policy fellow at the Institute of Economic Affairs, a London-based free-market think tank. Lesh, who co-authored Digital Overload, a 2023 report that cautions against granting the CMA “extensive, discretionary powers” amounting to telling some of the planet’s most successful and popular platforms how to run their businesses, told Reason that the CMA’s stance reflects a shift in how such bundling is perceived.
Lesh argues that including Copilot, Microsoft’s AI chatbot, in any designation is especially outrageous. He points out that last year, when Google was designated as having strategic market status, the CMA excluded Gemini because the AI assistant sector was relatively small, nascent, and highly dynamic. Lesh contends that while the CMA recognised uncertainty about Google’s market, it now proposes sweeping Microsoft’s workplace AI into a designation that would require a forecast spanning at least five years into the future.
“Five years ago, ChatGPT didn’t exist. Anyone confident about who will lead workplace AI in 2031 should be running a hedge fund, not a regulator,” he told Reason.
Where Europe has tended to take a much more interventionist line on technology, the United States has, by comparison, celebrated competition and innovation. Yet American lawmakers are increasingly flirting with similar restrictions on Big Tech.
In June, Senators Chuck Grassley (R–Iowa) and Amy Klobuchar (D–Minn.) reintroduced the American Innovation and Choice Online Act, which would empower federal and state antitrust authorities to challenge certain practices by dominant online platforms, including privileging their own products and disadvantaging rivals. Jack Nicastro described the bill in Reason as an “atrocious importation of European-style competition policy,” arguing that it would undermine innovation and consumer choice. The following month, Senator Mark Warner (D–Va.) introduced the AI AGENT Act, which would impose new requirements on major online platforms to accommodate competing AI agents.
These proposals are meant to address concerns parallel to those voiced by the CMA in Britain. The underlying argument is that established firms outperforming their rivals is evidence of “market failure,” threatening the very innovations that helped them become market leaders.
Technological progress has always been driven by entrepreneurs and the companies they build, competing to win over consumers. Britain seems to have forgotten this. If the United States wants to stay at the forefront of technology, it should resist adopting the British approach.
