Microsoft’s dominance in workplace software is under new scrutiny after competition regulators launched a major investigation into whether the tech giant is limiting customer choice through the bundling of products including Windows, Office, Teams and Copilot AI.

The probe will examine whether Microsoft’s software ecosystem makes it difficult for businesses and government organisations to switch to rival providers or integrate competing applications and AI services.

Regulators are focusing on whether bundling practices, default settings and interoperability restrictions reduce competition in enterprise software and cloud services markets.

The investigation will also look at how third-party AI vendors can integrate with Microsoft’s productivity suite as businesses increasingly adopt generative AI tools.

Microsoft products including Word, Excel, Teams and Windows are used by more than 15 million commercial users, making the software giant deeply embedded in workplace operations across business and government sectors.

Authorities said concerns had been raised that customers may not be able to effectively combine Microsoft software with products from rival vendors, potentially restricting access to lower-cost or better-performing alternatives.

The investigation could ultimately result in Microsoft being designated as having “strategic market status”, a classification that would give regulators broader powers to impose conduct requirements and competition measures.

The move also follows growing scrutiny of Microsoft’s cloud licensing practices, which rivals have argued unfairly favour the company’s Azure platform.

Microsoft said it would cooperate fully with the inquiry.

“We are committed to working quickly and constructively with the CMA to facilitate its review of the business software market,” a company spokesperson said.

The latest investigation adds to mounting global regulatory pressure on Microsoft surrounding its AI partnerships, cloud business and software dominance, with previous probes examining its relationship with OpenAI and its hiring of staff from AI startup Inflection.

The investigation is expected to conclude by February 2027.