Italy’s competition authority has launched a formal investigation into Microsoft’s practice of integrating its Copilot and Designer AI tools directly into Microsoft 365 subscriptions, alleging that the tech giant may have forced consumers into paying for features they did not want or were not adequately informed about. The probe, announced by the Autorità Garante della Concorrenza e del Mercato (AGCM) on June 26, 2026, targets Microsoft Ireland Operations and Microsoft Italy. It marks the first major European antitrust action focused specifically on the bundling of generative AI services with core productivity software.

The AGCM’s initial filing alleges that Microsoft folded the AI functionalities—Copilot, which offers assistant-style text and data analysis, and Designer, a graphic creation tool—into existing Microsoft 365 plans without clearly delineating an opt-out path or obtaining explicit consent for a price increase that accompanied the change. Consumers and small businesses, the authority contends, were presented with a take-it-or-leave-it update that left them paying more for a suite they had originally purchased under different terms.

The Core of the Complaint

At the heart of the investigation is whether Microsoft violated Italy’s consumer code, which mandates transparency and fairness in contractual modifications. The AGCM asserts that when Microsoft began automatically activating Copilot and Designer for all Microsoft 365 Personal and Family subscribers in early 2026, it also raised subscription fees by approximately €2 per month—a 20% hike for the basic tier. The price increase was justified by Microsoft as reflecting “the enhanced value of AI-powered productivity.”

However, regulators argue that such a bundled rollout deprives users of genuine choice. A spokesperson for the AGCM stated, “We are examining whether the company abused its market position by tying unrelated AI services to essential software, making it unreasonably difficult for consumers to maintain their existing plan at the original price.” The investigation will scrutinize the mechanics of the opt-out process, which allegedly required users to navigate through multiple settings menus and, in some cases, contact support to revert to a non-AI version—a version that Microsoft eventually discontinued.

What Microsoft Bundled into 365

Microsoft began piloting AI integrations in 2023 with the introduction of Microsoft 365 Copilot for enterprise clients, priced as a premium add-on. By late 2025, the company started weaving Copilot features directly into the consumer editions of Word, Excel, PowerPoint, and Outlook. Designer, which uses AI to generate images, presentations, and social media graphics, was similarly elevated from a standalone web app to a built-in component of the 365 ecosystem.

The move aligned with CEO Satya Nadella’s vision of an “AI-first” product line, but it also blurred the line between optional upgrades and mandatory inclusions. For example, when opening a blank document in Word 2026, users found a Copilot pane already active, with prompts to “Ask me anything.” Disabling it required toggling a deep-level privacy setting. Meanwhile, the subscription page for Microsoft 365 showed the higher price as the only available tier; the legacy “Classic” plan without AI had vanished from the main offerings.

A pivotal element of the Italian probe is the manner in which consent was obtained—or, as the AGCM suspects, not obtained. Under the EU’s Unfair Commercial Practices Directive, any material change to a paid service must be clearly communicated, and consumers must be given a straightforward opportunity to reject the change without penalty. The authority believes Microsoft may have failed on both counts.

“Users reported receiving an email that framed the update as an improvement, with a brief mention of a price adjustment,” said Elena Rossi, a digital rights advocate in Rome. “Many didn’t realize they could opt out at all until the charge appeared on their credit card statement. By then, Microsoft had already migrated accounts, and reversing it was a Kafkaesque process.”

Indeed, the investigation document references dozens of consumer complaints filed with AGCM’s complaint portal. One excerpt reads: “I never asked for Copilot. I just want Word and Excel like before. Why am I forced to pay for AI I don’t use?” Another small-business owner recounted that upgrading his five-person team cost an extra €120 per year with no benefit, as his staff’s workflows did not require generative AI.

The Opt-Out Labyrinth

Microsoft’s official support pages instructed users who wished to decline the AI features and associated price rise to “switch to Microsoft 365 Classic.” However, that option was not visible in the standard account portal. Instead, a user had to first cancel their current subscription, then during the cancellation flow, a “keep classic” offer would sometimes appear. This dark pattern, as critics labeled it, effectively penalized those who wanted to avoid AI.

The AGCM noted that such tactics could amount to an aggressive commercial practice, especially when combined with the fact that many users rely on Microsoft 365 for essential personal and professional tasks, giving them limited bargaining power. “The consumer may feel locked in, with no practical alternative to accepting the higher fee,” the authority’s preliminary statement said.

Microsoft’s Response

In a terse statement, Microsoft Italy said it is “cooperating fully with the AGCM and believes our practices are fair and compliant with Italian law.” The company emphasized that AI features like Copilot represent a “significant technological advancement” and that the updated pricing reflects “years of research and development investment.” It also pointed to high adoption rates: according to Microsoft’s Q1 2026 earnings call, over 70% of Microsoft 365 consumer subscribers actively used at least one AI-powered feature per week.

Critics, however, question the validity of that metric. “Active use could simply mean the Copilot pane loaded when they opened Word,” said Marco Bellini, a Milan-based tech analyst. “It doesn’t measure utility or satisfaction. Many people actively tried to turn it off.”

Broader Regulatory Context

The Italian probe is not an isolated event. Throughout 2025 and 2026, AI bundling has come under increasing scrutiny in the EU. The European Commission’s proposed AI Liability Directive and updates to the Digital Markets Act (DMA) seek to prevent gatekeepers from mandating ancillary AI services as part of a core platform. Microsoft, designated a gatekeeper under the DMA for its Windows operating system, already faces obligations not to tie services without user consent.

Last month, France’s CNIL initiated a separate inquiry into whether the integration of Copilot into Windows 12’s default apps respects GDPR consent requirements for personal data processing. The Italian investigation, however, is the first to zero in on the pricing mechanism itself, treating the AI bundle as a potential unfair commercial practice rather than a pure data protection issue.

Industry Repercussions

If the AGCM rules against Microsoft, it could impose fines of up to €10 million or 10% of the company’s annual turnover in Italy—whichever is higher—and force a structural unbundling of AI features from the standard 365 subscription. That would set a precedent for other tech giants, including Google, which has begun embedding its Gemini assistant into Google Workspace, and Apple, which rolled out Apple Intelligence as a core iOS 20 feature.

“This is a watershed moment,” said Claudia Ferri, an antitrust lawyer at Studio Legale BonelliErede. “It tests whether the fast-moving AI market can be regulated through existing consumer laws or if we need new legislation. No one wants to stifle innovation, but innovation funded by hidden price hikes is not a sustainable model.”

Consumer groups across Europe are already citing the Italian case in their own national complaints. A coalition of 17 organizations from Spain, Germany, and the Netherlands issued a joint letter urging the European Commission to fast-track guidelines on AI bundling. They argue that without intervention, AI features will become an unavoidable tax on essential software.

What’s at Stake for Users

For the millions of Italian households and businesses that rely on Microsoft 365, the investigation raises immediate, practical questions. Should they expect a refund if the AGCM rules in their favor? Possibly—though such restitution would likely come in the form of a credit or a forced price rollback rather than a direct payout. More importantly, the case could accelerate Microsoft’s return of a permanently available, non-AI subscription tier across the EU.

Some users have already voted with their wallets. Alternative office suites like OnlyOffice and LibreOffice reported a 40% spike in downloads in Italy during the first half of 2026. Startups offering “AI-free” productivity tools have also gained traction, marketing themselves as havens for those overwhelmed by unsolicited algorithmic assistance.

Looking Ahead

The AGCM’s investigation is expected to take up to 12 months, though interim measures could be imposed sooner if the authority deems the practice causes “serious and irreparable harm” to consumers. For now, Microsoft 365 subscriptions in Italy continue to be sold with AI included, at the higher price. But the regulatory pressure is mounting, and the outcome will echo far beyond Rome.

Microsoft’s challenge will be to balance its AI ambitions with the legal reality that innovation, no matter how dazzling, does not exempt a company from transparency and fair dealing. As one European Commission official put it on condition of anonymity: “The age of move fast and break things is over. If you want to break ground, you first have to explain the price tag and let people say no.”