AI Pricing Under Scrutiny
Italian Antitrust Probes Microsoft 365 for AI Price Hikes, Automatic Upgrades
Key Points
Codacons asserted that the lack of transparency towards consumers and the vague information on the services provided and their costs 'produce significant economic damage,' and it expects 'a huge fine' if irregularities are found, with action to secure reimbursement of the largest sums paid due to unfair practices.
The price hikes for Microsoft 365 are described as 'due to take effect from July 1 this year' with Copilot and Designer AI features folded into the package.
Italy's antitrust regulator said consumers 'appeared to be moved by default to a higher-priced subscription plan unless they exercised their right to withdraw,' highlighting potential consumer-protection concerns about automatic upgrades.
The case is being viewed in a broader European regulatory framework under the Digital Markets Act, with the European Commission designating cloud platforms like AWS and Azure as gatekeepers and permitting fines up to 10% of annual global turnover for violations, alongside obligations to ensure interoperability with rivals.
Beyond Microsoft, AI-driven cost pressures are being felt in the hardware market, with regulators noting price increases tied to AI data-center demand across devices such as Xbox consoles, iPads, and Macs, and other gaming majors like Sony and Nintendo also raising prices.
Italy's antitrust regulator has opened a formal probe into Microsoft over its Microsoft 365 price hikes tied to AI features. Yahoo Finance reported that the Autorità Garante della Concorrenza e del Mercato — known as the AGCM — is investigating both Microsoft Ireland Operations Ltd and Microsoft Srl for alleged unfair commercial practices. At the heart of the case: consumers were reportedly moved by default to higher-priced subscription plans without being clearly told why.
The price increases are due to take effect July 1, 2026, folding AI tools Copilot and Designer into the standard Microsoft 365 package. Italian consumer group Codacons says the lack of transparency 'produces significant economic damage' and is demanding reimbursements if regulators confirm wrongdoing. Microsoft says it will cooperate fully with the investigation.
Consumers Auto-Upgraded to Pricier AI Plans Without Clear Notice
The AGCM found that Microsoft's communications about the change were 'fragmented.' Regulators said consumers appeared to be moved by default to a higher-priced subscription plan unless they actively chose to opt out. In other words, silence was treated as consent. The regulator labeled this an 'aggressive practice' that 'unduly limited consumers' freedom of choice,' according to MarketScreener.
The AGCM also said Microsoft failed to make clear that Copilot and Designer — its AI tools — were being bundled into the 365 package. Consumer advocates call this a 'dark pattern,' where confusing defaults push users into spending more money than they intended. Tens of millions of individual users and small businesses on auto-renewal plans face potential unintended charges.
Codacons Pushes for 'Huge Fine' and Mass Reimbursements
Italian consumer group Codacons is not holding back. The group says the vague information Microsoft gave consumers about new costs and services 'produces significant economic damage.' Codacons publicly expects 'a huge fine' and has said it will pursue action to secure 'reimbursement of the largest sums paid due to unfair practices.' Under DMA-aligned frameworks, fines can reach up to 10% of a company's annual global turnover.
Microsoft shares dropped 3.46% to around $352.83 on the day the AGCM announcement came out, according to MarketScreener. That signals investors are paying attention to Europe's willingness to act. A company spokesperson said Microsoft is 'committed to complying with Italian consumer law' and will work with authorities.
Italy's Probe Is Part of a Sweeping European AI Crackdown
This investigation does not stand alone. On June 25, 2026 — one day before the AGCM announcement — the European Commission issued a preliminary opinion designating Microsoft Azure and Amazon Web Services as 'gatekeepers' under the Digital Markets Act. Together, Azure and AWS control roughly 70% of European cloud revenue. Gatekeepers face strict rules on interoperability and fair competition, with fines up to 10% of global annual turnover for violations.
The UK's Competition and Markets Authority opened its own investigation into Microsoft's productivity tools and Copilot in May 2026. Switzerland launched a parallel probe into Microsoft's licensing fees in January 2026. European Commission Vice-President Teresa Ribera said ensuring a 'level playing field for all cloud service providers' is essential as cloud infrastructure becomes the 'backbone of the modern digital and AI economy.'
Microsoft Frames AI Bundling as Value, Not a Trap
Microsoft's defense rests on a simple argument: Copilot and Designer make 365 a better product, so the higher price reflects real new value. From this view, the company is not hiding fees — it is monetizing a genuine upgrade. Microsoft has bundled software before, most notably Teams, which it was eventually forced to unbundle from the Office suite following a separate European investigation in 2025.
AI cost pressures are real across the industry. Microsoft also raised certain Xbox console prices by $100, citing AI datacenter costs. Apple and other hardware makers face similar pressures. But regulators argue that passing those costs to consumers through automatic plan upgrades — without clear disclosure — crosses a legal line. The AGCM's findings, expected later this year, could force Microsoft to offer a cheaper, AI-free version of Microsoft 365 to European users.
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