UK regulator demands further cloud interoperability from AWS and Microsoft
The UK’s Competition and Markets Authority (CMA) has released an update on efforts by Amazon Web Services (AWS) and Microsoft to reduce barriers to switching cloud providers. While progress has been made, the regulator is calling for further improvements. Separately, the CMA has proposed designating Microsoft as having strategic market status in business software, a move Microsoft disputes.
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30 SEC SUMMARY
- The UK’s Competition and Markets Authority (CMA) reports progress by AWS and Microsoft in reducing barriers to switching cloud providers, though further improvements are needed.
- AWS and Microsoft have connected data centres to rivals like Google and eliminated fees for data transfers to other providers.
- The CMA proposed designating Microsoft as having strategic market status in business software, covering products like Windows, Office, and Copilot.
- Microsoft disputes the CMA’s view, arguing its products are open and interoperable.
- The CMA will decide on Microsoft’s strategic market status by February 2027.
TABLE OF CONTENTS
KEY HIGHLIGHTS
- The CMA accepted voluntary commitments from AWS and Microsoft in March to avoid a formal cloud market investigation.
- AWS and Microsoft have connected data centres to rivals like Google and eliminated fees for data transfers to other providers.
- The CMA proposed designating Microsoft as having strategic market status in business software, covering Windows, Office, and Copilot.
- Microsoft disagrees with the CMA’s assessment, stating its products are open and interoperable.
- The CMA will make a final decision on Microsoft’s strategic market status by February 2027.
Progress in cloud interoperability
The UK’s Competition and Markets Authority (CMA) has acknowledged progress by Amazon Web Services (AWS) and Microsoft in reducing barriers to switching cloud providers, according to The Next Web. Both companies have taken steps to improve interoperability, including connecting their data centres directly to rivals like Google and eliminating fees for customers moving data to other providers.
The CMA accepted voluntary commitments from AWS and Microsoft in March 2026 to avoid a formal investigation into the cloud market. These commitments included enabling requests for better links between services and offering AI tools to facilitate migrations.
Regulator calls for further improvements
While the CMA recognizes these steps, it has called for additional measures. The regulator wants AWS and Microsoft to simplify the management of user logins and access across different cloud platforms. It also demands systems that allow seamless movement between providers without unnecessary hurdles.
The CMA’s update highlights lingering concerns about the ease of switching cloud providers, despite the progress made. The regulator’s ongoing oversight suggests that further changes may be required to meet its standards.
Microsoft’s strategic market status under review
The CMA has proposed designating Microsoft as having strategic market status in business software, a move that would subject the company to stricter regulatory scrutiny. This proposal covers products like Windows, Office, Copilot, security tools, server software, and databases. If approved, Microsoft would become the third company, after Google and Apple, to fall under Britain’s digital markets regime.
Key areas of focus for the CMA include how Microsoft licenses its software to rival cloud providers and whether customers can freely choose AI tools other than Copilot.
Microsoft has pushed back against the CMA’s assessment, stating that its products, including Copilot, are open and interoperable. The company welcomed the CMA’s decision not to designate its cloud position as warranting regulatory intervention.
Timeline for regulatory decisions
The CMA will make a final decision on Microsoft’s strategic market status by February 2027. AWS, in response to the update, reiterated its commitment to investing in AI and tools that work across cloud platforms.
What this means
Lazyfounder analysis — our interpretation, not reported fact.
For founders and operators, this update signals a shift toward greater interoperability in cloud services, which could reduce costs and complexity when switching providers. However, the CMA’s scrutiny of Microsoft’s business software dominance suggests that compliance and competitive adaptability will remain critical, especially in AI and enterprise tools. Startups relying on Microsoft’s ecosystem may face evolving regulatory constraints, while those using AWS or multi-cloud strategies could gain more flexibility.
Key takeaways
- AWS and Microsoft have taken steps to reduce cloud switching barriers, but regulators expect further improvements in interoperability and user access.
- Microsoft’s potential designation as a strategic market player could lead to stricter oversight of its business software, including Copilot and Office.
- Founders using cloud services or Microsoft’s enterprise tools should monitor regulatory developments, as compliance requirements and competitive dynamics may shift.
- AI and cross-cloud interoperability are emerging as key focus areas for regulators, which could impact product integrations and go-to-market strategies.
FAQ
What changes have AWS and Microsoft made to improve cloud interoperability?
AWS and Microsoft have connected their data centres to rivals like Google, eliminated fees for customers moving data to other providers, and introduced AI tools to assist with migrations. They have also allowed customers and rivals to request better links between services.
What additional improvements is the CMA demanding?
The CMA wants AWS and Microsoft to simplify user login management across different cloud platforms and ensure systems can move between providers without unnecessary hurdles.
What does Microsoft’s proposed strategic market status entail?
If designated, Microsoft would face stricter regulatory oversight for its business software products, including Windows, Office, and Copilot. The CMA will examine how Microsoft licenses its software and whether customers can freely choose competing AI tools.
Why does Microsoft disagree with the CMA’s proposal?
Microsoft argues that its products, including Copilot, are already open and interoperable. The company welcomed the CMA’s decision not to designate its cloud position as warranting regulatory intervention.
When will the CMA make a final decision on Microsoft’s strategic market status?
The CMA will make its final decision by February 2027.
Related on Lazyfounder
Sources
- The Next Web · 2026-10-16
UK watchdog says AWS and Microsoft must do more to ease cloud switching
This story is an original summary drafted with AI by Lazyfounder from the reporting listed above and checked by automated validation. Facts are attributed to their original publishers; sections marked as analysis are Lazyfounder's. Where a source is in another language, facts were machine-translated and quotations are reported, not reproduced. Read the original coverage via the links, and see our AI policy and corrections policy.
About the author
Editor, Lazyfounder
Tarun Mottlia edits LazyFounders, covering Indian startups, funding rounds, AI and product launches. Every story on the site is AI-assisted and checked against its cited sources before publication.
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