Australia’s consumer regulator has launched legal action against Microsoft Corp accusing the company of misleading millions of Australians into paying higher prices for its Microsoft 365 subscriptions after integrating its artificial intelligence assistant Copilot.
The Australian Competition and Consumer Commission (ACCC) alleges that from October 2024 Microsoft informed customers they needed to switch to new higher-priced Microsoft 365 Personal and Family plans bundled with Copilot while failing to clearly disclose that a cheaper “Classic” plan was still available.
The case filed in the Federal Court of Australia claims Microsoft’s conduct misled around 2.7 million consumers breaching Australian Consumer Law by creating a false impression of limited choice and steering users toward more expensive subscriptions.
Price increases and hidden cheaper plan
According to the ACCC the annual cost of the Microsoft 365 Personal plan rose by 45 per cent to A$159 (US$103) and the Family plan increased by 29 per cent to A$179 following the addition of Copilot.
However the regulator said Microsoft only revealed the cheaper Classic plan when customers began cancelling their subscriptions describing the practice as a “deceptive design” that exploited consumer behaviour.
“We allege Microsoft’s conduct caused consumers to pay more than necessary by concealing the availability of cheaper plans” said ACCC Chair Gina Cass-Gottlieb. “Australians deserve clear upfront information about pricing and options.”
The ACCC is seeking financial penalties refunds for affected users and legal costs from Microsoft.
Microsoft’s response
Microsoft said it is reviewing the allegations and will cooperate fully with the ACCC. The company added that it has made global updates to improve clarity around its subscription offerings and cancellation processes.
“We are committed to transparency and helping customers understand their choices” a Microsoft spokesperson said.
Global scrutiny over subscription models
The lawsuit comes amid growing global scrutiny of subscription-based pricing and AI-linked product bundles. Regulators in the UK European Union and United States have also investigated major tech firms including Apple Google and Meta over similar consumer transparency concerns.
If found in breach of consumer law Microsoft could face multi-million-dollar fines and be required to revise its subscription and pricing practices across Australia.
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