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

      The regulator has stated that customers were transitioned to a more expensive plan bundled with Copilot unless they actively opted out, and they were not given enough information to make an informed choice. The way a price increase is implemented can be just as significant as the price itself, which is what Italy’s competition authority has decided to investigate.

      On June 26, the regulator announced it had launched an investigation into Microsoft regarding alleged unfair commercial practices related to a price hike on its Microsoft 365 subscription. The initiation of a probe does not imply any wrongdoing, but marks the commencement of a thorough review.

      The issue isn't primarily about the increased price but rather about how customers reached that price point. According to the authority's statement, Microsoft failed to adequately inform consumers about the integration of Microsoft 365 with its AI tools, Copilot and Designer. The regulator noted that customers were automatically switched to a costlier plan unless they opted out, and they received insufficient information to determine whether to renew.

      The legal focus is on the design of this default setting. The watchdog indicated that such a practice could be deemed aggressive as it unduly restricted consumers' freedom of choice, suggesting that the case will concentrate on the opt-out structure rather than just the price increase. An automatic upgrade that necessitates customer attention to decline it is a trend regulators across Europe are increasingly scrutinizing.

      The increase in pricing is legitimate and forthcoming. Microsoft’s 365 price hikes will take effect on July 1, 2026, incorporating the AI features into the package. The investigation pertains to the communication of that change, not the justification for charging more for an expanded product.

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

      The Italian authority's assertion that the integration was not sufficiently disclosed and that the upgrade was effectively automatic transforms a pricing issue into a consumer-consent matter, which is more challenging for a company to dismiss. The issue of adoption surrounding the bundling is well-known. Over the past year, Microsoft has been attempting to convert users of the free Copilot Chat into paying customers, a challenge it addressed during its Build conference. Integrating the AI into a higher-priced default plan is one strategy to improve those conversion rates.

      Microsoft is currently under antitrust scrutiny from multiple fronts, facing ongoing investigations from the US Federal Trade Commission, and the Italian case adds a European consumer-protection perspective to a busy year of regulatory challenges. Even in its own terms, Microsoft has referred to Copilot’s output as "entertainment only" in certain contexts, a point that feels contradictory when justifying a price increase related to that feature.

      The determination made by the authority will depend on a specific question: Did customers understand what they were signing up for, and were they genuinely given the opportunity to opt out? At the time the investigation was announced, Microsoft had not provided a detailed public comment, but the company has the right to present its position as the review unfolds.

      The authority has clarified that the initiation of an investigation is a procedural action, not a conclusion. Recent pressures on Copilot economics have also prompted Microsoft to reevaluate aspects of its enterprise AI strategy. Cases like this can often take months to resolve and may conclude with a settlement, an agreement to improve disclosures, or result in no finding at all.

      The upcoming steps are procedural, involving the collection of evidence and Microsoft's response, with no specific timeline disclosed. For the moment, this case remains an investigation rather than a verdict, and the price increase is set to proceed as planned.