<div id="readability-page-1"><div id="body">The UK's competition watchdog will investigate Microsoft's business software ecosystem over concerns that its licensing policies reduce competition in the cloud market.The Competition and Markets Authority (CMA) announced the move today as one of several decisions following its investigation into the health of the cloud services marketplace last year.As well as preparing a strategic market status (SMS) investigation into Microsoft's applications portfolio, the regulator says that Microsoft and Amazon have set out actions on cloud egress fees and interoperability, highlighted as stifling competition in its final decision on the cloud investigation. In light of this, it appears that the watchdog has refrained from an investigation into whether the two cloud giants should be designated with strategic market status in the cloud, as it was minded to last year, at least while the companies cooperate. Designating a company with strategic market status would allow the regulator to impose rules designed to promote competition.But the CMA says that further steps are required to help UK customers adopt a multi-cloud strategy and to switch clouds easily, with &#34;ongoing dialogue&#34; around these areas. It will seek views from UK customers and competitors to inform this dialogue, and the agency's board will review progress in six months. Microsoft claims that it has already taken steps globally to remove barriers to switching cloud providers, pointing to its Azure Arc tool that can manage resources across different clouds from a single console.However, it says that in response to the CMA's concerns, it will make changes for customers migrating from its UK datacenters. Free egress will apply not only to transfers using standard internet channels, but also to transfers using the Microsoft Global Network (MGN), it says.Redmond is also extending the period during which UK customers may complete a free egress switch to a rival cloud from 60 days to 180 days, and expanding the definition of a qualifying &#34;switch&#34; to cover customer exit from an individual Azure service, rather than applying only to a complete exit from Azure. The firm also pledges to establish a new, dedicated interoperability request mechanism for other cloud providers, with an aim to be up and running within six months. Microsoft modeled this on the interoperability request framework it has already implemented for Windows under the EU Digital Markets Act, and lets other cloud operators raise interoperability requests, including requests for new interconnect options.Amazon likewise says that it unveiled AWS Interconnect multicloud last November, allowing customers to transfer data between clouds via dedicated private connections at a flat price, with no data transfer fees. It also promises a free tier will be available – whenever it reaches general availability, that is.It also points to its AWS IAM Outbound Identity Federation, which enables customers to federate their AWS identities to external services, and claims it supports new interoperability protocols as they come along, such as the model context protocol (MCP) for AI.When it comes to the strategic market status (SMS) investigation into Microsoft's business software, the CMA says that it is acting on concerns raised by customers and other cloud operators that its software licensing stifles competition in the cloud.The concerns center on products such as Windows Server and SQL Server being more expensive to run on certain rival clouds, notably Google Cloud and AWS, as Microsoft permits customers to reallocate on-prem licenses to cover cloud-based instances running on Azure.Google in particular claimed that it costs up to five times as much to move legacy workloads to a non-Microsoft cloud, serving as a major incentive for businesses to choose Azure instead.CMA chief executive Sarah Cardell said that it was vital to take action now. Otherwise, the cloud market dominance by the big players like Microsoft will be replicated in emerging markets such as AI services as well.&#34;We're taking action now, deciding to launch an investigation into Microsoft's business software ecosystem,&#34; she stated. &#34;An SMS designation would enable us to tackle remaining concerns around Microsoft's licensing practices in cloud and would also enable us to ensure a level playing field as AI is rapidly embedded into everyday business software tools.&#34;The CMA's decisions drew a mixed response.The Computer &amp; Communications Industry Association (CCIA), whose membership comprises giant American tech firms, said: &#34;It is very welcome news that the CMA will avoid overly broad and prescriptive interventions that would have impeded investment and innovation in UK cloud services. The regulator can focus its efforts on action to address specific issues, particularly restrictive software licensing terms for legacy software, which are costing UK users a fortune,&#34; said the head of CCIA's London office, Matthew Sinclair.However, Mark Boost, chief exec of UK-based cloud provider Civo, expressed disappointment that more is not being done.&#34;The decision made by the CMA to investigate Microsoft is encouraging, but the decision to exclude AWS raises practical concerns with both providers being structured in the same way from a lock-in perspective, which could create a regulatory imbalance between the two parties that would keep one side unchallenged,&#34; he claimed.&#34;The current announcement does not provide adequate solutions to solve the serious issues surrounding the dominance of these key foreign-based hyperscalers. There needs to be a fair digital market in which domestic innovation is encouraged, alongside continuing to help build opportunities for international collaboration and trade.&#34;Nicky Stewart, senior advisor to the Open Cloud Coalition, said that the investigation into Microsoft's business licensing must proceed without delay.&#34;We welcome this further recognition from the CMA that unfair software licensing practices have broken the cloud market,&#34; she said, adding: &#34;We also urge the CMA to take swift action should Microsoft and AWS fail to meet their commitments on egress fees and interoperability.&#34;The strategic market status (SMS) investigation into Microsoft's business software ecosystem is due to start in May, and could take up to nine months to complete. The CMA will issue an invitation to comment once the investigation is under way. ® </div></div>

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The UK's Competition and Markets Authority (CMA) is investigating Microsoft's licensing policies in the cloud market, citing concerns over reduced competition. The CMA's actions follow a broader inquiry into the cloud services marketplace. Microsoft plans to enhance customer migration options and interoperability with other cloud providers. The investigation also addresses claims that Microsoft's software licensing practices disadvantage competitors, particularly in relation to costs for running software on rival clouds. The CMA aims to ensure fair competition as the cloud and AI markets evolve.

UK watchdog targets Microsoft licensing in cloud competition probe