Italy initiates an antitrust investigation into the price increase of Microsoft 365's AI features.

      The regulator has stated that customers were switched to a more expensive Copilot-bundled plan unless they opted out, and they lacked sufficient information to make an informed choice. The way a price increase is implemented can be as significant as the price itself, which is the focus of an investigation that Italy's competition authority has initiated. On June 26, the regulator announced it had launched an inquiry into Microsoft for alleged unfair commercial practices related to a price hike in its Microsoft 365 subscription.

      The initiation of this investigation does not imply any wrongdoing, but rather marks the beginning of a thorough review. The concern is more about the process leading to the higher price than the price itself. The authority indicated that Microsoft did not sufficiently inform consumers about the integration of its AI tools, Copilot and Designer, into Microsoft 365. Customers were automatically transitioned to a more costly plan unless they actively opted out, according to the regulator, and were not given enough information to decide whether to continue with their subscription.

      The legal basis revolves around the design of the default settings. The regulator mentioned that this method could be seen as aggressive, as it unduly restricted consumers' freedom of choice, suggesting that the case will focus on the opt-out process rather than the price increase itself. Regulators throughout Europe are becoming less tolerant of automatic upgrades that require customers to notice and decline them.

      The pricing changes are real and will be implemented on July 1, 2026, with the AI features included in the bundle. The investigation is focused on how this change was communicated, not whether Microsoft is allowed to charge more for an expanded product.

      The case is situated at a crucial point for regulators, concerning the incorporation of AI features into existing software and the associated pricing. Microsoft has integrated Copilot into multiple products, despite data indicating that only a small number of users were willing to pay for it. The Italian authority's perspective, that the integration was inadequately disclosed and that the upgrade felt automatic, shifts the issue from a pricing dispute to one of consumer consent, presenting a more difficult challenge for the company to navigate.

      There is a well-documented adoption issue linked to this bundling. Over the past year, Microsoft has sought to convert free Copilot Chat users into paying customers, impacting their strategy at the Build conference, and incorporating AI into a more expensive default plan is one approach to improve those numbers.

      Microsoft is under antitrust scrutiny on multiple fronts, facing continuing examination from the US Federal Trade Commission, and the Italian case adds a European consumer protection angle to a busy regulatory year. Even within Microsoft's own terms, some descriptions of Copilot output have referred to it as "entertainment only," which contrasts uncomfortably with a price increase based on that feature.

      The authority's decision will depend on a specific question: Did customers fully understand what they were agreeing to, and were they genuinely given an opportunity to decline? At the time of the investigation's announcement, Microsoft had not provided a comprehensive public response, but the company has the right to present its case as the review unfolds. The authority has made it clear that commencing an investigation is merely a procedural step, not a definitive conclusion.

      Recent pressures on Copilot's economics have prompted Microsoft to reconsider aspects of its enterprise AI strategy. Investigations like this often take months and could lead to a settlement, a change in disclosure practices, or even no finding at all. The next steps will be procedural, involving evidence gathering and Microsoft’s response, with no specific deadline revealed. For now, the case remains an investigation rather than a ruling, and the planned price increase will continue as scheduled.