Australia’s competition watchdog has launched Federal Court proceedings against Microsoft, alleging the tech giant deliberately misled approximately 2.7 million customers by concealing cheaper subscription options after bundling its artificial intelligence assistant Copilot into Microsoft 365 plans and raising prices.
The Australian Competition and Consumer Commission (ACCC) claims that since October 31, 2024, Microsoft told auto-renewing subscribers they must either accept Copilot integration at higher prices or cancel their subscriptions entirely, while omitting a third option: switching to Classic plans at the original lower prices without Copilot.
The price increases were substantial. Microsoft 365 Personal annual subscriptions jumped 45 percent from A$109 to A$159, while Family plans climbed 29 percent from A$139 to A$179. For many Australian households and small businesses relying on Microsoft’s suite of productivity tools, these increases represented a significant financial burden.
According to the ACCC, Microsoft communicated the changes through two emails and a blog post, none of which mentioned the availability of Classic plans. The cheaper Classic option only became visible when subscribers began the cancellation process, a design the regulator argues deliberately concealed alternatives to push customers toward more expensive plans.
“Following a detailed investigation, we will allege in court that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans,” ACCC Chair Gina Cass-Gottlieb said.
She emphasized that canceling a Microsoft 365 subscription isn’t a decision many would make lightly. The subscription includes widely used applications like Word, PowerPoint, Excel, and Outlook, which have become essential tools in both professional and personal contexts for millions of Australians.
“We’re concerned that Microsoft’s communications denied its customers the opportunity to make informed decisions about their subscription options, which included the possibility of retaining all the features of their existing plan without Copilot and at the lower price,” Cass-Gottlieb explained.
The ACCC alleges Microsoft’s conduct breached Australian Consumer Law by providing false or misleading representations about available subscription options. The regulator contends that millions of Australian consumers may have suffered economic harm through automatic renewals at higher prices when they would have preferred the Classic plans had they known about them.
The investigation drew on consumer reports and commentary from online forums such as Reddit, where customers voiced frustration about the price increases and lack of transparent alternatives. Information provided through the ACCC’s Infocentre proved critical in alerting the regulator to the issue.
Microsoft launched Copilot as its consumer-facing generative AI product in 2023, integrating it into Microsoft 365 Personal and Family subscriptions in Australia on October 31, 2024. The global rollout followed in January 2025, with varying price increases applied across different jurisdictions.
The ACCC is seeking penalties, consumer redress, injunctions, declarations, and costs from both Microsoft Australia Pty Ltd and its U.S. parent company, Microsoft Corp. Under Australian Consumer Law, the maximum penalty for each breach is the greater of A$50 million, three times the benefits obtained, or 30 percent of the corporation’s adjusted turnover during the breach period if benefits cannot be determined.
However, the ACCC noted that any penalties would be a matter for the court to determine based on its findings, and the regulator declined to speculate on what penalties might be imposed.
A Microsoft spokesperson said the company was reviewing the ACCC’s claim in detail. “Consumer trust and transparency are top priorities for the company,” the spokesperson stated. “We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards.”
From a defense perspective, Microsoft is likely to argue that Classic plans existed and were documented publicly, that the company informed customers via multiple channels, and that any failure to see the Classic option stemmed from individual user behavior rather than deliberate concealment.
The case highlights broader tensions around how technology companies communicate pricing changes and new features to existing customers, particularly when bundling AI capabilities that not all users want or need. The outcome could set precedents for subscription transparency requirements across Australia’s digital economy.
The ACCC’s action comes at a time when competition, product safety, consumer issues, and fair trading in the digital economy have been identified as current enforcement priorities for the regulator. If successful, the case could influence how software companies globally handle subscription changes and communicate options to customers.
For now, existing Microsoft 365 Personal and Family subscribers who haven’t had their subscriptions renewed since July 8, 2025, and wish to revert to their previous plan may be able to select the cancel option and follow steps in the cancellation process until the Classic plan is offered. However, the ACCC cautions that subscription options and prices are entirely within Microsoft’s control and could change at any time.
Source: newsghana.com.gh
