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On 25 June 2026, the Commission preliminarily designated both Amazon Web Services (AWS) and Microsoft Azure (Azure) as gatekeepers under the Digital Markets Act, the first time this has ever been done without either company meeting the standard quantitative thresholds. Instead, the Commission relied entirely on qualitative criteria: entrenched user bases, high switching costs and critically the growing role of AI in locking customers into these ecosystems.

If confirmed (expected November 2026), both providers will have just 6 months to bring their cloud services into full compliance with the DMA's obligations.

What Is the DMA and Why Does It Matter?

The Digital Markets Act (DMA) is an EU regulation designed to ensure contestable and fair markets across the digital sector. Its core purpose is to, identify the largest digital platforms those acting as essential gateways between businesses and their customers, designate them as "gatekeepers," and subject them to a set of strict obligations and prohibitions designed to prevent unfair practices and keep markets open to competition.

The DMA expressly includes cloud computing as a core platform service eligible for gatekeeper designation. Under Article 3, a provider qualifies as a gatekeeper when it has a significant impact on the EU internal market, serves as an important gateway between businesses and their customers, and holds an entrenched and durable position in its market. The DMA establishes quantitative thresholds that ordinarily trigger a presumption of gatekeeper status; EEA turnover of at least €7.5 billion, or a market capitalisation of at least €75 billion, alongside 45 million monthly active EU users. Neither AWS nor Azure meets those thresholds for their cloud services.

The Commission designated them anyway using a market investigation route that assesses qualitative factors like lock-in effects, network dependencies, and corporate structure. This is a first, and the implications for the wider Microsoft ecosystem are significant.

Why Cloud Is an Uncomfortable Fit for the DMA

The DMA was designed for consumer facing platforms app stores, social networks, marketplaces. Cloud computing is fundamentally different; it is a business-to-business infrastructure service. The EU already has the EU Data Act, a purpose built regime directly addressing cloud switching costs, egress fees, and interoperability. Layering DMA obligations on top before the Data Act even bedded in, creates genuine compliance complexity for businesses operating across the Microsoft ecosystem.

The AI Factor

One of the most significant threads running through the Commission's reasoning is artificial intelligence. As Henna Virkkunen, Executive Vice-President for Tech Sovereignty, put it:

"Cloud services have become a cornerstone of Europe's economy and a prerequisite for AI with over half of EU businesses now relying on them, combined with record investment in public cloud infrastructure."

The Commission's findings go further, identifying that AI tools and partnerships are now actively driving cloud procurement decisions and that AWS and Azure are capturing the majority of that AI-driven demand growth within their own ecosystems.

For partners building AI-powered solutions on Azure, this cuts both ways. It validates the scale of the commercial opportunity. But it is precisely the kind of dynamic regulators are now trained to treat as a competition problem. If the remedies that follow designation target how AI services are bundled, priced, or accessed and they very well might partners operating in that space need to be ready for the ground to shift.

Regulatory Divergence: EU Statutory Rules vs. UK Voluntary Commitments

While the EU is taking a strict statutory approach, the UK is taking a lighter-touch route.

The UK’s Competition and Markets Authority (CMA) concluded its cloud services market investigation in July 2025, finding that “competition is not working well.” Crucially, the CMA highlighted that AWS and Microsoft each control up to 40% of the UK cloud infrastructure market by value, pointing to egress fees, technical barriers to switching, and Microsoft's software licensing practices as key areas of concern.

However, rather than hitting both providers with formal statutory enforcement under its new digital markets regime, the CMA accepted voluntary commitments on 31 March 2026. These include:

• Reduced egress fees
• 180-day free switching windows
• Improved interoperability with rival clouds (with a formal progress review after six months)
• EU Customers: Gain hard, enforceable statutory rights on data portability, interoperability, and fair access under the DMA.
• UK Customers: Must rely on voluntary provider promises that the CMA can monitor, but cannot enforce with the same direct statutory force.

What This Divergence Means in Practice

For any Microsoft partner serving clients in both the UK and Europe, standard contracts and licensing assumptions can no longer be treated as "one size fits all."

What This Means for Microsoft Partners:

1. Compliance will flow downstream. Microsoft will update its partner policies and programme requirements to meet DMA obligations around interoperability, data access, and fair competition. Partners will not be able to control the timeline or the scope of those changes.
2. The UK and EU are moving at different speeds. EU customers will gain enforceable statutory rights on data portability, interoperability, and an end to self-preferencing backed by direct regulatory enforcement. UK customers rely on contractual commitments that the CMA can monitor but cannot enforce with the same statutory force. For any business operating or advising clients across both markets, that divergence is a live issue in cloud contracts and regulatory due diligence today.
3. Two regulatory regimes, one market. The DMA does not operate in isolation. The EU's Data Act with its own provisions on cloud switching costs, egress fees, and interoperability does not fully come into force until January 2027. Navigating both frameworks simultaneously, alongside the CMA's parallel investigation into Microsoft's software licensing practices, creates compliance complexity that will require careful planning.
4. Scrutiny of Bundling and Go-to-Market Stacks: The DMA strictly forbids gatekeepers from self-preferencing or tying products together anticompetitively. If Microsoft alters product bundles or standalone SKU pricing, partners relying on packaged solutions will need to reassess their pricing models and service descriptions.
5. Significant Non-Compliance Penalties: Non-compliance risks fines up to 10% of global annual turnover (and up to 20% for repeated infringements). Because enforcement is severe, Microsoft’s contractual changes will filter down rapidly to the partner network.

Do You Need to Do Anything Now?

To protect margins and ensure contractual resilience, Microsoft partners should audit their operational and legal posture:

• Audit Partner & Customer Contracts: Do your agreements clearly define what happens if Microsoft unilaterally alters licensing terms, discounts, or API access?
• Review Egress and Switching Clauses: Are your contracts structured to reflect changing customer expectations around switching rights and cloud-to-cloud portability?
• Differentiate UK vs. EU Engagements: Do your Master Services Agreements (MSAs) reflect the statutory protections available to EU clients versus the voluntary commitments governing UK deployments?
• Prepare for Post November 2026: If the Commission confirms Azure’s designation in November, ensure your delivery, legal, and commercial teams have a plan for the six-month transition period.

Need guidance reviewing your Microsoft partner contracts or customer terms? Speak with the specialist technology law team at Law 365 to ensure your agreements remain compliant, competitive, and protected against platform changes.