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

      The regulator indicated that customers were transitioned to a more expensive Copilot-bundled plan unless they opted out, and they were provided with insufficient information to make an informed choice. The process surrounding a price increase can be just as significant as the price itself, which is what Italy’s competition authority has opted to investigate.

      On June 26, the regulator announced it had initiated an inquiry into Microsoft regarding allegations of unfair business practices related to a price hike on its Microsoft 365 subscription. The commencement of an investigation does not imply any wrongdoing, but marks the start of a thorough examination.

      The concern is less about the increased price and more about how consumers reached that point. As per the authority’s statement, Microsoft failed to adequately inform users that Microsoft 365 had been integrated with its AI tools, Copilot and Designer. Customers were automatically switched to a pricier plan unless they took steps to opt out, according to the regulator, and they did not receive enough information to decide on renewal.

      The legal focus is on the nature of that default setting. The watchdog suggested that this practice could be perceived as aggressive because it significantly restricted consumers’ freedom of choice, indicating that the case may hinge on the opt-out structure rather than just the price increase. An automatic upgrade that requires customers to notice and decline it is a trend that regulators across Europe are increasingly unwilling to overlook.

      The pricing increase is legitimate and set to take effect on July 1, 2026, with the AI features included in the package. The investigation centers on the communication of that change, not whether Microsoft can charge more for a broadened product.

      This case is at a crossroads that regulators have been examining for some time: the bundling of AI features into existing software and the associated pricing implications. Microsoft has integrated Copilot into various products, even as data indicated that only a small percentage of users were actually paying for it.

      The Italian authority’s perspective, stating that the integration was not adequately disclosed and that the upgrade was essentially automatic, shifts a pricing issue into a matter of consumer consent, which is more difficult for a company to dismiss.

      The challenges linked to this bundling are well-documented. Over the past year, Microsoft has been trying to convert users of the free Copilot Chat into paying customers—a challenge underscored at its Build conference—and incorporating the AI features into a higher-priced default plan is one strategy to enhance those numbers.

      Microsoft is currently under scrutiny for antitrust issues on multiple fronts. The company is also being examined by the US Federal Trade Commission, and the Italian investigation adds a European consumer protection angle to an already busy regulatory year.

      Notably, Microsoft’s own terms have described Copilot output in some instances as "entertainment only," a detail that awkwardly contrasts with a price increase justified by the feature.

      The authority’s decision will depend on a narrow question: Did customers comprehend what they were signing up for, and were they genuinely given a chance to decline?

      As of the time the investigation was disclosed, Microsoft had not provided a detailed public response, but the company is allowed to present its case as the review continues. The authority has made it clear that initiating an investigation is a procedural step rather than a conclusion.

      This pressure concerning Copilot's economics has recently prompted Microsoft to reassess aspects of its enterprise AI strategy. Such cases typically take months and may conclude with a settlement, a commitment to alter disclosure practices, or no findings at all.

      The next procedural step involves evidence collection and Microsoft’s response, with no specified deadline set. For the moment, the case remains an investigation without a verdict, and the price increase continues as planned.