Australia’s competition regulator, the Australian Competition and Consumer Commission (ACCC), has filed a lawsuit against Microsoft, alleging that the tech giant misled around 2.7 million Australian customers over subscription price increases tied to its Copilot AI integration in Microsoft 365.
According to the ACCC, Microsoft informed users that they must either accept a higher subscription price or cancel their existing plan — while failing to disclose a third option that would have allowed them to continue using their original Microsoft 365 “classic” plan without Copilot at the previous, lower rate.
The disputed price changes, introduced on October 31, 2024, saw significant increases — with the personal plan rising by 45%, from $109 to $159, and the family plan up by 29%, from $139 to $179. The ACCC alleges that Microsoft’s emails and official blog posts regarding the updates were misleading because they made no mention of the “classic” non-Copilot plans until customers initiated the cancellation process.
ACCC Chair Gina Cass-Gottlieb said the omission may have caused customers to feel pressured into paying more for AI-enabled plans. “The omission may have pressured consumers into paying more for plans with Copilot,” she said, emphasizing that the regulator views transparency in pricing communications as a critical aspect of fair trading.
The regulator contends that many consumers were not aware they could continue their existing subscriptions at the old price without the AI features, resulting in a large number of users potentially upgrading involuntarily. The case raises broader concerns about clarity in communication as companies increasingly bundle AI-powered tools into subscription-based services.
The Federal Court of Australia will now determine whether Microsoft’s conduct breached consumer law by engaging in misleading or deceptive practices.
This lawsuit comes amid heightened global scrutiny of tech firms over AI monetization strategies and their implications for users. Regulators worldwide are keeping a close watch on how companies like Microsoft, Google, and OpenAI communicate product changes and associated costs as artificial intelligence becomes more deeply embedded into everyday software offerings.
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