Italy’s competition authority, the Autorità Garante della Concorrenza e del Mercato (AGCM), has opened a formal investigation into Microsoft over allegations the tech giant is abusing its dominant market position by bundling artificial intelligence features with Microsoft 365 and steering users toward higher-priced subscriptions. The probe, announced on June 26, 2026, zeroes in on the integration of Copilot and Designer into the productivity suite and whether recent changes to Microsoft 365 plans have unlawfully restricted consumer choice.

The investigation marks a significant escalation in Europe’s ongoing scrutiny of big tech’s AI integration strategies. Regulators are examining whether Microsoft’s moves to make AI tools a core part of its Office ecosystem have created barriers for users who may not want or need the features, effectively forcing them into pricier tiers.

The AI Integration That Triggered the Probe

Microsoft’s push to embed generative AI across its products has been relentless since the launch of OpenAI-powered Copilot in early 2023. Initially, Copilot was offered as an optional add‑on for Microsoft 365 subscribers, with a separate $30 per‑user monthly fee for the enterprise‑focused Copilot for Microsoft 365. That changed in late 2025 when the company began folding basic Copilot functionality into standard plans, while reserving advanced features for higher‑priced tiers. At the same time, Microsoft Designer—the AI graphic design tool—was integrated into Word, PowerPoint, and other apps, further blurring the lines between optional extras and built‑in capabilities.

The AGCM is now investigating whether this bundling strategy violates Article 102 of the Treaty on the Functioning of the European Union, which prohibits the abuse of a dominant position. Central to the probe are two concerns: first, that Microsoft leveraged its monopoly in productivity software to force adoption of its AI tools; and second, that the company deliberately downgraded the functionality of lower‑cost plans, making them unattractive compared to pricier options that include Copilot and Designer.

What the AGCM Is Investigating

According to the authority’s press release, the investigation will assess several specific practices:

  • Tiered AI features: Whether Microsoft intentionally limited Copilot and Designer capabilities in basic and standard plans to push users toward premium tiers.
  • Pricing structure changes: The sudden removal of certain mid‑range plans that offered a balance of price and features, leaving only bare‑bones or AI‑packed choices.
  • User‑interface nudging: Reports that Microsoft 365 apps displayed persistent prompts and “recommended upgrade” notifications that users found difficult to dismiss, a classic sign of dark patterns.
  • Bundling of Designer: The inclusion of Microsoft Designer as a default feature in Word and PowerPoint, with no option to uninstall or disable it without upgrading to a plan that permitted such control.

The AGCM notes that it has received complaints from both individual consumers and businesses, many of whom felt they had no realistic alternative but to upgrade. One SME owner, speaking anonymously, described the experience: “We were on the E3 plan, and suddenly apps started showing watermarks on AI‑enhanced graphics unless we moved to E5. It felt like a ransom.”

Allegations of Anti‑Competitive Behavior

The Italian probe echoes broader concerns that Microsoft is replicating the playbook that landed it in antitrust hot water in the 1990s, when it bundled Internet Explorer with Windows. This time, however, the bundled product is not a web browser but a suite of AI tools that, according to critics, are being forced upon a captive audience.

Legal experts point to several potential violations. First, tying: Microsoft may be conditioning the sale of its dominant Microsoft 365 suite on the purchase of Copilot and Designer, products that should be available independently. Second, self‑preferencing: by deeply integrating its own AI tools, Microsoft could be disadvantaging third‑party AI plug‑ins that integrate with Office. Finally, the restructuring of subscription plans may constitute a form of “margin squeeze,” where lower‑cost plans are rendered so unattractive that customers have no meaningful choice.

European consumer groups have long warned about the power of default settings. “The moment Copilot is turned on by default in a plan that millions of enterprises already rely on, the market for alternative AI assistants shrinks drastically,” said Marco Renzelli, a competition lawyer based in Brussels. “The AGCM’s action could set a precedent for how AI bundling is treated under EU law.”

Consumer Impact and Dark Patterns

Beyond the legal theory, the human impact of Microsoft’s AI push is drawing scrutiny. Users on forums and social media have documented a cascade of changes that made the AI integration feel less like an upgrade and more like a squeeze.

Many reported that after an automatic update in early 2026, Microsoft 365 apps began displaying a prominent Copilot icon in the toolbar that could not be removed. Clicking it triggered a full‑screen prompt to start a free trial of the premium AI features. Dismissing the prompt only led to another one days later. In some cases, basic functions like “Save As” in Word were relocated to make room for Copilot buttons, disrupting muscle memory.

“It’s death by a thousand paper cuts,” said Elena Ferrara, a freelance translator and long‑time Microsoft 365 subscriber. “Every time I open Excel, it suggests I let Copilot analyze my data. I don’t need that. But I also don’t want to spend hours customising the interface to make it stop.”

These accounts align with the “dark patterns” tag officials have attached to the probe—manipulative design techniques that push users toward choices that benefit the company. The AGCM is examining whether such nudges violate the EU’s Unfair Commercial Practices Directive, which bans aggressive commercial practices that impair consumers’ freedom of choice.

Microsoft’s Response

In a brief statement, a Microsoft spokesperson said the company “is committed to offering customers choice and value in how they access AI innovations” and that it “will cooperate fully with the AGCM’s inquiry.” The statement added that all Microsoft 365 plans “continue to provide robust productivity tools without AI, and customers can choose the plan that best fits their needs.”

But the company declined to comment on specific complaints about interface changes or whether it would consider unbundling Copilot and Designer. Industry observers note that Microsoft is unlikely to back down easily, given the strategic importance of AI to its future revenue growth. Copilot alone is projected to generate tens of billions in annual revenue by 2027.

Broader EU Regulatory Context

The Italian investigation does not exist in a vacuum. The European Commission has been tightening the screws on big tech through the Digital Markets Act (DMA) and the Digital Services Act (DSA). While Microsoft has so far avoided being designated a “gatekeeper” under the DMA for its productivity software, the AGCM’s action could pressure Brussels to reassess.

Meanwhile, parallel investigations into AI‑related competition issues are already underway. The French competition authority is examining whether Microsoft’s partnership with OpenAI distorts the market for foundation models. The UK’s Competition and Markets Authority has also signalled interest in the AI‑bundling practices of major cloud providers. The Italian probe could feed directly into these wider deliberations, creating a domino effect.

For Microsoft, the stakes are high. If the AGCM finds an infringement, it could impose fines of up to 10% of the company’s global annual turnover—potentially tens of billions of euros. More critically, it could force Microsoft to untie Copilot and Designer from Microsoft 365, fundamentally altering its AI monetisation model.

What’s Next

The AGCM has not set a deadline for its preliminary investigation, but such probes typically last several months. During this time, the authority will gather evidence, conduct interviews, and potentially issue interim measures if it deems the harm to consumers is ongoing. A final decision could come in 2027, and any adverse finding would likely be appealed, dragging the process out for years.

In the meantime, consumer groups are advising Microsoft 365 users to carefully review their subscription plans and explore alternatives such as LibreOffice, Google Workspace, or OnlyOffice—products that have recently added AI features but maintain more transparent pricing structures. For businesses locked into long‑term enterprise agreements, the options are fewer, but the AGCM’s scrutiny may at least slow Microsoft’s AI rollout.

A Turning Point for AI and Antitrust

The Italian probe is more than a local skirmish. It represents the first time a major competition authority has formally investigated AI‑feature bundling as a potential antitrust abuse. The outcome will shape how Microsoft—and its rivals—design, price, and integrate artificial intelligence into everyday software.

For now, the spotlight is on whether Microsoft crossed the line from innovation to coercion. As Ferrara put it: “I like some AI tools, but I want to choose them, not have them shoved in my face every time I try to type a document.” Whether European regulators force that choice back into consumers’ hands remains to be seen, but one thing is clear: the era of AI‑first antitrust enforcement has begun.