After an earlier rollout in international markets, Microsoft is now deciding to pair Copilot with Microsoft 365 with us as well. That unsolicited bundling comes with a hefty price increase.
Microsoft is now pairing Copilot with Microsoft 365 even with us unsolicited. That artificial bundling of products brings an immediate price increase for Microsoft 365 customers. Microsoft started pushing Copilot through Microsoft 365 in international markets earlier this month. EU rules now don’t stop Microsoft from doing the same in Europe.
Artificial coupling
That’s surprising. Microsoft had to disconnect Microsoft Teams from the Microsoft 365 bundle, for example. Europe ruled that Microsoft abused its dominant market position with the Office suite to gain market share with Teams and stifle competition.
Copilot’s mandatory integration into Microsoft 365 is even more artificial in that respect. While an AI product like Copilot can integrate with mail and productivity software, it is de facto a completely different product.
By forcing Copilot on Microsoft 365 customers, Microsoft hopes to make Copilot the default AI tool for users worldwide, while also recovering some money via the price increase. After all, investment in OpenAI to develop LLMs, as well as inference costs when people effectively use Copilot, are weighing in.
Higher price, limited use
Specifically, Microsoft is significantly increasing the price of subscriptions. For example, an annual subscription to Microsoft 365 Family is going up from 99 euros (incl. VAT) to 129 euros. There is no obvious way to purchase Microsoft 365 without Copilot integration.
For that money, customers do not get unlimited access to the AI tool. Instead, Microsoft works with an AI credit balance of 60 credits. Those are renewed every month. Each AI inference costs one credit.
“Everything is Copilot”
Microsoft, for its part, is trying to point out to the world that Copilot and Office are not two different things. To that end, the company recently made a name change: Microsoft 365 became Microsoft 365 Copilot. Microsoft 365’s logo also changed to that of Copilot.
Those superficial tweaks do not change the reality: the bulk of Microsoft 365 customers use Excel, Word, PowerPoint and Outlook to work in on a daily basis. The applications are very powerful and, in fact, have no real equal. In those daily workflows, Copilot is at best a useful tool, but by no means part of the core experience the customer is looking for.
No confidence in own strength
Microsoft chooses to force the solution on customers rather than bet on the possible strength of the application. The company evidently does not trust Copilot to be valuable enough for customers to decide to purchase on their own. Those who do consider an AI assistant may be satisfied with Copilot but that too is not a good thing. By pairing the assistant as standard with commonly used applications (as well as integrating with Windows), Microsoft is lumbering the market around AI assistants before competitors even have a chance to market their products.
It is unclear whether the EU will let this linkage pass. Either way, the bureaucracy showed itself to be on the slow side. The history with Teams has proven that it is interesting for Microsoft to flout the rules around competition and right the wrongs afterwards. When countermeasures come, the competition has already been crushed and market share gained.