On June 26, 2026, Italy's Autorità Garante della Concorrenza e del Mercato (AGCM) opened a formal investigation — proceeding PS13129 — into Microsoft Ireland Operations Ltd. and Microsoft S.r.l. over the company's handling of Microsoft 365 subscription renewals. The conduct at issue: automatically defaulting renewing consumers to higher-cost plans that bundle Copilot and Designer AI tools, without adequately disclosing that the service had materially changed or that cheaper alternatives still existed.
This is not merely a pricing complaint. Italy's competition authority has formally characterised Microsoft's conduct as a potentially unfair and aggressive commercial practice under Italian consumer protection law — a framing that matters because it triggers a faster, lower-threshold enforcement track than traditional competition law.
What Microsoft Actually Did
The mechanics are worth examining precisely. When Microsoft began rolling out its AI-enhanced Microsoft 365 plans, it integrated Copilot and Designer — generative AI assistants for text and image creation — into the core subscription tier. The old Personal plan, priced at €69 per year, was replaced by a Copilot-bundled version at €99. The Family plan moved from €99 to €129. Both represent a €30 annual increase — approximately 30 to 43 percent depending on the plan.
The problem, according to the AGCM, was not the price increase itself but the default enrollment mechanism. Consumers with auto-renewal enabled received notification that their subscription would renew at the new, higher price, without being clearly informed that the transformation bundled AI features they may not have wanted — or that a Copilot-free option at the original price remained available. That option, according to the Authority, was not prominently disclosed upfront and may only have been surfaced if a subscriber initiated the cancellation flow.
The AGCM concluded that consumers had not received "clear information to understand what was changing in the service and decide consciously whether to renew," and that auto-enrollment at the higher default constituted an aggressive practice that "unduly compressed consumers' negotiating autonomy."
The Strongest Case for Microsoft
Before treating this as obvious misconduct, it is worth pausing on the strongest counterargument in Microsoft's favour. Software subscriptions evolve constantly. Feature additions — faster processors, expanded cloud storage, security upgrades — routinely change the underlying product without triggering disclosure obligations. Microsoft could argue that Copilot is simply the next generation of a productivity suite, no different in kind from adding real-time co-authoring or video calling in earlier cycles. Under this reading, regulators risk constructing an AI-specific disclosure regime that penalises integration of genuinely useful features and imposes compliance burdens that slow adoption and raise per-unit costs.
This argument has genuine weight. If AI assistance materially improves the product, forcing artificially rigid unbundled pricing could create market segmentation that benefits no one and treats AI integration as categorically suspicious rather than technically neutral.
Where the Argument Breaks Down
But the Italian proceeding is not about whether Copilot is useful. It is about how the transition was communicated — specifically, whether a forced default migration to a higher-cost tier, without clear disclosure of an available alternative, meets the standards consumer protection law requires.
Australia's ACCC articulated this distinction with precision in its October 2025 Federal Court filing against Microsoft, involving approximately 2.7 million Australian subscribers. The ACCC alleged that Microsoft presented consumers with only two options — accept Copilot at higher prices or cancel — while concealing the availability of "Classic" plans that retained original features at original prices. ACCC Chair Gina Cass-Gottlieb stated Microsoft "deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process."
That pattern — obscuring a lower-cost option during a forced upgrade cycle — is precisely what consumer protection law exists to address. It is not a market-efficiency argument. It is a dark-pattern argument. The issue is not that Microsoft charges more for AI; it is that Microsoft chose a default-enrollment mechanism that made exercising a downgrade option artificially difficult to discover.
The Teams Template
The AGCM investigation arrives less than a year after the EU Commission settled its own Microsoft bundling case on a different product. After opening a formal investigation in July 2023 and issuing a Statement of Objections in June 2024, the Commission reached agreement with Microsoft in September 2025 on the bundling of Teams with Microsoft 365 and Office 365. Microsoft committed to offer versions without Teams at reduced prices, improve interoperability with rival collaboration tools, and maintain those commitments for seven to ten years.
The Teams resolution is instructive in two ways. First, it shows that Microsoft will offer unbundled alternatives under regulatory pressure — the question is whether that happens before or after a formal infringement finding. Second, it demonstrates that AI bundling, like Teams bundling, is likely to require structural remedy rather than mere fines: the practical outcome will probably be a prominent, Copilot-free subscription tier at the pre-integration price point, offered at renewal.
Microsoft has stated it is "committed to complying with Italian consumer law" and will cooperate with the investigation.
What Comes Next in Italy
Under Italy's Consumer Code (Legislative Decree 206/2005, as amended), unfair and aggressive commercial practices can carry fines of up to €10 million and — more consequentially — enforcement orders requiring companies to modify or cease the challenged conduct. If the AGCM concludes against Microsoft, the most likely remedies are a required opt-out to Copilot bundling at renewal and a mandate that Copilot-free options be disclosed at equal prominence to the default plan.
Italian proceedings typically run 12–18 months before a final decision. Switzerland's competition authority is also investigating Microsoft 365 pricing, and the ACCC case in Australia is active in the Federal Court.
The Broader Signal
What Italy's probe reflects is a maturation of regulatory thinking around AI integration. The early debate — whether AI should be regulated at all — has given way to a narrower, more tractable question: are the commercial mechanisms by which AI is introduced to consumers fair and transparent? That question requires no hostility to AI to answer. It requires the same disclosure standards that apply to any other material modification to a subscription service.
Italy, Australia, and Switzerland are testing whether Microsoft will accept those standards voluntarily or whether enforcement will be necessary. The Teams precedent suggests the outcome, and ultimately the cost, is already known.