Tech News Assistant Editor
Tez Mukamba
The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against technology giant Microsoft, accusing it of misleading millions of its Microsoft 365 subscribers into paying more for its artificial intelligence assistant, Copilot.
According to the ACCC, Microsoft Australia and its U.S.-based parent company, Microsoft Corporation, are alleged to have made “false or misleading representations” to roughly 2.7 million Australians who automatically renew their Microsoft 365 subscriptions.
The commission claims that Microsoft failed to clearly inform customers of all available subscription options, effectively pressuring many into paying higher fees for plans bundled with the new AI-powered Copilot tool.
Hidden ‘Classic’ Plan Option
In its filing before the Federal Court, the ACCC said Microsoft presented subscribers with two apparent choices — to either upgrade to a Copilot-enabled Microsoft 365 plan at a higher price or to cancel their subscriptions entirely.
However, the regulator revealed that there was a third, less visible option that allowed users to continue with their existing “Classic” plans at the same price — but that this option was deliberately hidden from view unless a subscriber began the cancellation process.
“Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated cancellation,” said ACCC Chair Gina Cass-Gottlieb. “This conduct was designed to push more consumers toward the higher-priced, Copilot-integrated subscriptions.”
Impact on Consumers
The commission noted that Microsoft 365, which includes essential Office applications such as Word, Excel, and Outlook, is deeply embedded in both personal and professional life. With few practical alternatives to Microsoft’s software suite, the ACCC argued that many users would feel compelled to accept the costlier plan rather than cancel their subscription altogether.
The alleged misconduct dates back to October 31, 2024, affecting both personal and family subscribers across Australia.
According to the watchdog, the Copilot-integrated plans were priced between 29% and 45% higher than the standard versions — a significant increase that may have cost consumers millions collectively.
Legal Action and Possible Penalties
The ACCC is now seeking substantial penalties, injunctions, and compensation for affected consumers, alongside court orders compelling Microsoft to improve transparency in its pricing and communication practices.
Under Australian consumer law, Microsoft could face penalties exceeding AUD 50 million (USD 30 million) per violation if found guilty.
Microsoft has not yet issued a formal response to the allegations. However, industry analysts suggest the case could set an important precedent for global tech regulation, particularly as companies integrate AI tools into paid digital services.
A Broader Global Trend
This latest lawsuit comes amid growing scrutiny of Big Tech companies worldwide, as regulators from the European Union to the United States intensify investigations into how firms market AI-driven products. Consumer protection agencies are especially concerned that AI upgrades may be bundled or priced in ways that exploit customer dependency on essential digital services.
As the case moves forward, all eyes will be on how Australia’s Federal Court rules — a decision that could reverberate across the tech world and shape how software companies roll out and market AI-based subscription features.
