The Competition and Markets Authority (the ‘CMA’) is investigating whether Microsoft misled customers about subscription options, causing them to pay more.

The probe concerns whether Microsoft clearly explained subscription options after changes to Microsoft 365 personal and family plans.

The changes affected monthly and annual plans, now including Copilot and other features.

From January 2025, existing customers received new features, including Copilot, at no extra cost until renewal, when they were moved to a higher-priced plan unless they chose another option or cancelled.

Customers had a limited-time option to switch to a “Classic” plan with the previous features at the old price.

Annual Personal and Family customers paid £25 more than on the Classic plan.

The CMA is considering whether Microsoft’s renewal communications were misleading.

The regulator has not reached any conclusions on whether Microsoft broke the law.

CMA senior director Hayley Fletcher said customers need clear, timely information when subscription plans change.

The Legal Implications

It appears the CMA are becoming increasingly active in their policing of subscription models and are interested in whether consumers are being provided with clear, timely and accurate information about subscription contracts, pricing, renewals, and cancellation rights.

Providers of Subscription as a Service (‘SaaS’) contracts, who are considering making changes to the way in which they provide their services, should consider: –

– Whether important pricing information is sufficiently prominent.

– Whether consumers understand when a free trial converts into a paid subscription.

– Whether auto-renewal mechanisms are transparent.

Many SaaS businesses rely on monthly rolling subscriptions, default renewal mechanisms, and free trials converting into paid plans etc. However, it is important that it is made clear to customers exactly what they are signing up for and when payments will be taken (including how much).

Additionally, SaaS providers should make sure their cancellation practices are as straightforward as possible, as it appears increasingly clear that the legal risk for businesses lies in customer offboarding, rather than onboarding.

Berry Smith’s Bottom Line

The CMA’s investigation into Microsoft’s subscription shows they are not just concerned with regulating contracts but also regulating customer journeys, with significant implications for every SaaS provider operating in the UK.

Saas providers should regularly review whether: –

– Pricing terms are clear;

– renewal provisions are prominent; and

– termination rights are explained in plain language

Some red flags businesses should look out for include hidden autorenewals, ambiguous cancelation provisions, and complex language customers are unlikely to understand.

Taking a proactive approach to reviewing contracts and operational processes can help businesses reduce the risk of investigation from the CMA which could potentially lead to fines and penalties.

At Berry Smith, our Commercial team are able to advise businesses on drafting, negotiating, interpreting and enforcing SaaS contracts. If you would like advice on anything including cancellation or termination provisions in your contracts, our team would be happy to help. Contact us: commercial@berrysmith.com