Australia’s competition watchdog has taken legal action against Microsoft , accusing the company of deceiving millions of Australian users into paying more for its Microsoft 365 subscriptions after adding its artificial intelligence feature, Copilot.
The Australian Competition and Consumer Commission (ACCC) filed the lawsuit on Monday, alleging that since October 2024, Microsoft misrepresented its subscription options to roughly 2.7 million customers.
The regulator claims that the tech firm led users to believe they had to upgrade to more expensive Microsoft 365 Personal and Family plans, which included the Copilot tool.
Following this integration, the price of the Personal plan rose by 45% to A$159 ($103.32), while the Family plan increased by 29% to A$179, according to the ACCC.
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Hidden Options and Lack of Transparency
The ACCC argues that Microsoft failed to make it clear that a lower-cost “classic” version of Microsoft 365 — one without Copilot — remained available.
Consumers reportedly only discovered this cheaper alternative after beginning the cancellation process, a design choice the regulator says violated Australian consumer law.
By not disclosing all available options upfront, Microsoft allegedly created a misleading impression about the necessity of switching to the higher-priced plans.
The regulator further stated that Microsoft’s previous communications — including emails and a blog post — did not mention the continued availability of the cheaper plan. Instead, customers were told that subscription prices would increase upon their next auto-renewal.
A Microsoft spokesperson said in an emailed statement that the company “was reviewing the ACCC’s claim in detail.”
The ACCC has announced it is pursuing penalties, consumer compensation, injunctions, and reimbursement of legal costs from Microsoft Australia Pty Ltd and its U.S. parent company, Microsoft Corp.
Under Australian consumer law, the maximum fine for each breach is the greater of A$50 million, three times the value of any benefit gained, or 30% of the company’s adjusted turnover during the breach period if the benefits cannot be determined.
“Any penalty that might apply to this conduct is a matter for the Court to determine and would depend on the Court’s findings,” the regulator said. “The ACCC will not comment on what penalties the Court may impose.”
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