Australia’s competition regulator has filed a lawsuit against Microsoft, accusing the tech giant of misleading millions of customers into paying higher prices for its Microsoft 365 software after integrating the AI tool Copilot.
The Australian Competition and Consumer Commission (ACCC) alleged that from October 2024, Microsoft misled about 2.7 million customers by implying they had to switch to higher-priced Microsoft 365 personal and family plans that included Copilot.
Following the integration, the annual subscription price for Microsoft 365’s personal plan rose by 45% to A$159 ($103.32), while the family plan increased by 29% to A$179. The ACCC said Microsoft failed to inform customers that a cheaper “classic” plan without Copilot remained available.
According to the regulator, users only discovered the cheaper option after beginning the cancellation process, a design that allegedly breached Australian consumer law by withholding material information and creating a false impression of available choices.
Microsoft’s emails and blog posts reportedly omitted mention of the cheaper plan, only notifying customers that price changes would apply at the next renewal.
A Microsoft spokesperson said the company was reviewing the claims in detail. The ACCC is seeking penalties, consumer redress, injunctions, and costs from both Microsoft Australia Pty Ltd and its U.S. parent company.
Under Australian law, companies found guilty of consumer law breaches can face penalties of up to A$50 million per violation, or up to 30% of turnover during the breach period if the financial benefit cannot be calculated.
“The penalty amount is a matter for the Court to determine,” the ACCC said, declining to comment further on potential fines.
