Britain's competition watchdog has launched an investigation into Microsoft, probing whether the tech giant misled customers over subscription options, potentially leading them to "pay more as a result".

The Competition and Markets Authority (Cma) is examining concerns that users of Microsoft 365 personal and family plans were not given adequate information regarding changes to their subscription choices.

The probe specifically targets alterations to monthly and annual plans, which now incorporate the AI service Copilot alongside other new features.

According to the Cma, from January 2025, existing subscribers initially received access to these new features, including Copilot, at no additional charge for the remainder of their current subscription.

However, once this period concluded, they were automatically migrated to a new, more expensive plan incorporating these features, unless they actively chose an alternative plan or cancelled their subscription.

A time-limited "Classic" plan, offering the original features at the previous price, was made available to existing customers.

Annual customers on the Microsoft 365 Personal and Family Plan paid £25 more than the Classic version.

The Cma said it is “looking into whether Microsoft’s communications with customers before renewal were misleading”.

The regulator said it has reached no conclusions about whether Microsoft broke the law.

Hayley Fletcher, senior director for consumer protection at the Cma, said: “People across the UK rely on Microsoft 365, whether they’re studying, sending emails or managing household finances.

“At a time when household budgets are squeezed, it’s important that people are clear on the price and the subscription plans available, so they can find the right deal for them.

“When a business changes its subscription plans, customers need clear and timely information about their options.

“Our investigation will consider whether Microsoft customers were misled and ended up paying more as a result.”

A Microsoft spokesman said: “Consumer trust and transparency are priorities for Microsoft, and we are reviewing the CMA’s claims in detail.

“We remain committed to working constructively with the regulator as their inquiry progresses.”

The news comes as Microsoft is eliminating 4,800 jobs, approximately 2.1 per cent of its global workforce, with a substantial number affecting its Xbox video game division.

The company confirmed 1,600 Xbox workers have already been laid off, with more expected this year as part of a broader reorganization to "reset" the unit amid heightened competition.

Xbox CEO Asha Sharma, who took over the gaming division earlier this year, stated in a memo, "Our business today is not healthy."