Microsoft could lose 10% of global revenue over Copilot price hike as UK opens bait-and-switch probe
Microsoft could lose 10% of global revenue over Copilot price hike as UK opens bait-and-switch probe
The CMA is investigating Microsoft for potentially charging customers too much for Microsoft 365 following AI upgrades last year.
Published on 31st July 2026
The UK’s Competition and Markets Authority has opened a fresh investigation into Microsoft, this time over how the company is marketing its Microsoft 365 Personal and Family subscription plans.
A cursory glance at the probe highlights that the CMA is trying to prevent Microsoft from sneaking in Copilot and AI features as justification for recent subscription price hikes. A closer look at the investigation displays a pattern of friction Microsoft runs into with regulators regarding its subscription practices, automatic renewals, and software bundling almost every time it adjusts its services.
The CMA made the investigation public on July 29, 2026, though the case itself was opened two days earlier. According to the CMA’s case announcement, the price gap between plans is concrete. The Classic Microsoft 365 Personal plan costs £59.99 a year, compared to £84.99 a year for the Copilot-equipped version, a difference of £25 annually. The Family plan costs £79.99 a year for Classic versus £104.99 a year with Copilot bundled in.
The CMA’s announcement hinges on Microsoft’s change in January 2025, when the company automatically added new features such as Copilot to existing Microsoft 365 plans with no increase in fees for the remainder of the subscription period. Unfortunately, once the plans were up for renewal, customers who were not paying attention were re-enrolled into higher-priced plans. Customers who were paying attention could avoid the bait-and-switch by selecting a ‘Classic’ plan or cancelling during the re-enrolment period.
This price change was covered when it first happened in February 2025, and even then, Microsoft would not directly attribute the increase to Copilot in their own communications. Personal plans jumped from $6.99 to $9.99 a month in the US, and Family plans went from $9.99 to $12.99, with the Classic option only showing for existing subscribers who knew to look for it during cancellation.
CMA regulators are now examining whether Microsoft provided adequate messaging for customers to understand what changes occurred and how much more they were going to pay despite spending months using features that were initially presented as free.
As Senior Director for Consumer Protection, Hayley Fletcher puts it, “When a business changes its subscription plans, customers need clear and timely information about their options.”
Microsoft’s pattern of regulatory scrutiny over Copilot pricing
The latest CMA probe isn’t Microsoft’s first rodeo over deceptive business practices, especially when it comes to subscription service adjustments, as the company leans heavily on SaaS revenue. In Australia, the ACCC has already taken Microsoft to court, alleging that customers in the region were also similarly misled about subscription options and price hikes related to Copilot integration into Microsoft 365.
The ACCC filed Federal Court proceedings in October 2025, alleging Microsoft misled roughly 2.7 million Australian subscribers by hiding the Classic plan option until customers began the cancellation process. The price increases at the centre of that case ran as high as 40% for Personal plans, and 29% for Family plans in Australia. If the Federal Court sides with the regulator, Microsoft faces civil penalties, injunctions, and mandated consumer redress on top of whatever reputational cost comes with a public finding of misleading conduct.
The Italian Competition Authority is currently conducting its own investigation into similar claims in the UK and Australia regarding Microsoft’s failure to properly inform customers about Copilot integrations and the pricing adjustments it now demands.
Italy’s Autorità Garante della Concorrenza e del Mercato (AGCM) formally opened its case on June 26, 2026, naming both Microsoft Ireland Operations and Microsoft Italy as subjects of the investigation. Notably, the Italian probe extends beyond Copilot to include Microsoft Designer, the AI-powered graphic design tool that was folded into the same subscription changes. Regulators there allege the increase reached as much as 30% and that information about the AI integration was delivered in a fragmented, unclear way rather than disclosed upfront.
Microsoft has repeatedly faced questions and probes about how clearly it communicates its automatic upgrade processes, upgrade paths, and other featured changes. On the gaming side of things, Microsoft was strong-armed into agreeing to adjust Xbox subscription practices after the UK regulators raised concerns about that particular auto-renewal policies left customers holding the bag for features and services they were not actively using.
Microsoft has also been riddled with enterprise cases where lawsuits and opposition have been filed against the company’s handling of bundled services, customer licensing tiers, and how it presents changes tied to feature releases.
Microsoft raised Microsoft 365 enterprise pricing again in July 2026, with increases up to 43% across some tiers as it folded in Security Copilot and other AI features. The timing is awkward, given that Microsoft’s own adoption numbers show fewer than 4.5% of Microsoft 365 customers pay for Copilot after three years, with only about 1% of the total customer base using it weekly. Regulators scrutinising whether customers were pushed into paying for a feature that few of them use only adds to the pressure.
What fair, transparent AI pricing means to regulators
Regulators around the world are increasingly focused on subscription fairness, especially as more essential digital tools adopt AI-driven upsells. The CMA’s concern isn’t solely about Copilot upsells, but about whether people were given enough information to decide if they wanted to pay for it once their renewal date arrived.
“As people rely more and more on AI tools like Copilot, it’s important that everyone is able to access these through fair and transparent practices and understand when they have the opportunity to shop around and make choices about which products they want to use,” Fletcher said.
How much the CMA could fine Microsoft
This most recent probe presents a particularly prickly situation for Microsoft since the CMA is one of the few regulatory bodies that have direct consumer enforcement powers. Since April 2025, the CMA has been able to decide whether consumer law was breached without involving additional courts.
Per the CMA’s own one-year progress report on its direct enforcement powers, the regulator ordered a total of £760,000 in consumer refunds and imposed £4.7 million in fines across all cases combined between April 2025 and April 2026. The largest single case so far involved the AA Driving School, fined £4.2 million (reduced from £7 million for early settlement) and ordered to refund £760,000 to more than 80,000 learner drivers over hidden booking fees.
If Microsoft is found to have breached the UK’s consumer protection rules, it could be facing a penalty of up to 10 percent of its global revenue.
What comes next for Microsoft
For Microsoft, the investigation comes at a time when the company is doubling down on AI features and implementations in its product strategy. During Microsoft’s most recent earnings call, the company mentioned that it will continue to build out its AI infrastructure and hinted at a continued pursuit of embedding its products with more AI. However, regulatory bodies in the UK, Australia, Italy, and elsewhere seem poised to curb Microsoft’s ambitions by enforcing simple, transparent, and fair customer-friendly protections.
As of now, the CMA hasn’t come to a decision. What it has done is signal that as AI becomes a default part of productivity software, the rules around how it’s handled via subscriptions need to be regulated and enforced.
Another blow for Microsoft
As the investigations and court cases rack up, where do you see this one heading for Microsoft? Punishment? Pardon? Or somewhere in between?
Let us know your thoughts.
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