CMA launches consumer protection investigation into Microsoft 365 subscriptions

On 29 July 2026 the Competition and Markets Authority (CMA) announced that it has opened an investigation into Microsoft 365 subscriptions.

With the new Digital Markets, Competition and Consumers Act 2024 (DMCCA) subscription contract rules not due to come into force until Spring 2027, the investigation shows that the CMA has no intention of waiting before using existing consumer protection rules to enforce against unfair subscription practices.

It builds on the CMA's ongoing case into Adobe, which considers whether Adobe's use of early termination fees in membership plans bound customers into staying in the contract unfairly.

Why is the CMA investigating Microsoft subscriptions?

The CMA is investigating specific concerns in relation to Microsoft 365 subscriptions and how the Copilot feature was introduced. In summary:

• From January 2025, Microsoft automatically gave existing 365 Personal and Family plan customers access to new features, such as Copilot, at no extra cost for the remaining subscription period.
• When the subscription ended, customers were automatically rolled on to a new plan with the additional features included at a higher price (£25 more per year), unless they took active steps to either pick another plan or end their subscription.
• For existing customers, Microsoft introduced a time-limited option to switch back to a ‘Classic’ Personal and Family plan. Classic plans offered customers the same features they had access to before the changes, at the same price. If they didn't actively switch to the 'Classic' plan, they would stay on the existing package at the higher price.

Potential consequences for Microsoft

Under new DMCCA enforcement powers, the CMA may have the power to enact fines of up to 10% of global turnover against Microsoft for breaches of consumer law.

The tools under scrutiny - the Microsoft 365 suite - have over 300 million active users, and investigations such as these may carry reputational risks.

Microsoft is facing another key CMA investigation: whether it should be designated as having Strategic Market Status (SMS) in relation to its business software ecosystem.

When the CMA launched the SMS investigation, it stated that one of the issues it was investigating was whether business choice may be limited due to Microsoft's use of bundling, lack of interoperability and default settings.

The CMA's decision to launch a separate consumer protection investigation in tandem is a good example of how it will use its consumer, competition and digital markets enforcement tools flexibly to achieve its desired outcomes.

Affordability and access to AI are key concerns for the CMA

As has been the case with other recent CMA cases, it has made a point to emphasise the issue of affordability in its rationale for the investigation. In the press release, the Senior Director for Consumer Protection at the CMA flagged the growing reliance of people on Microsoft 365 for study, work and managing personal finances, as well as the ongoing squeezes on household budgets which highlight the need for price transparency.

The CMA also made a point to note that it is "strongly in favour of AI adoption and the benefit this could bring to real people's lives", flagging that this should be balanced with adequate information provision to help customers shop around.

International scrutiny of tech subscriptions

The CMA is not alone in taking enforcement action in relation to tech subscriptions. Its live cases against Microsoft and Adobe align with parallel cases brought in other territories. For example:

• The Australian Competition and Consumer Commission has commenced court proceedings alleging that Australian consumers were misled by Microsoft around subscription price increases.
• The Italian Competition Authority is investigating whether Microsoft's customers were provided with sufficient information to assess the subscription changes before they came into effect and is also considering whether Microsoft's conduct amounts to an aggressive practice.
• The United States' Department of Justice recently settled with Adobe for $150 million in relation to Adobe's alleged use of unfair subscription termination fees.

Waiting for Spring 2027… what can businesses do to prepare?

The Microsoft and Adobe cases demonstrate that subscriptions remain a highly sensitive area from a UK consumer law perspective. Businesses shouldn't assume that the CMA will wait until the new DMCCA rules are cut and dried before taking enforcement action.

In the meantime, we suggest that businesses audit their subscription products against the 'blueprint' for the new DMCCA rules and existing consumer law, if they haven't already done so.

While it remains challenging to design a new subscription product that is fully compliant with the letter of new DMCCA rules (which are not yet fully formed), businesses can mitigate enforcement risks by focusing on key issues such as:

• Up-front transparency about what's included, with clear user interfaces in the sign-up journey;
• Auto-renewal transparency (including roll-over from free trial to paid subscription) and reminder notices;
• Easy cancellation – i.e. avoiding 'hard to find' cancellation mechanisms; and
• Avoiding unfair or unjustified termination charges.

If you would like to discuss this case or subscription contracts, get in touch with TLT's consumer law team. Our team advises a number of global brands and digital platforms on complex consumer law issues, including the launch of new subscription products during the build-up to the new DMCCA rules.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2026.  For more information see our terms & conditions.

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