The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against Microsoft, accusing the company of misleading more than 2.7 million customers into paying higher prices for its Microsoft 365 subscriptions after bundling them with its new artificial intelligence tool, Copilot.
According to the ACCC, Microsoft informed users in late 2024 that their 365 Personal and Family plans would automatically include Copilot — but with a steep price jump.
The annual cost of the Personal plan rose by 45%, from A$109 to A$159, while the Family plan increased by 29%, from A$139 to A$179.
Regulators say that while Microsoft promoted these upgraded plans, it failed to clearly disclose that a cheaper "classic" version without Copilot was still available, Reuters reported.
ACCC chair Gina Cass-Gottlieb said the regulator's investigation found that Microsoft's communication gave the false impression that customers had to accept the new, more expensive plan or cancel their subscription entirely.
"We allege that Microsoft deliberately hid this third option — to retain the old plan at the old price — in order to increase uptake of Copilot and its revenue," Cass-Gottlieb said during a press conference.
We’ve commenced proceedings in the Federal Court against Microsoft for allegedly misleading Australian customers when communicating subscription options and price increases, after it integrated its AI assistant, Copilot, into Microsoft 365 plans. https://t.co/PW5z8mgwJL pic.twitter.com/8cm5JbAewb
— ACCC (@acccgovau) October 26, 2025
ACCC: Hidden Plan Only Revealed During Cancellation
The hidden option, the ACCC claims, was only visible after users began the cancellation process.
It appeared on a later screen giving customers the unexpected choice to switch to the older, cheaper plan. Many subscribers, unaware of this step, renewed automatically at the higher rate.
The regulator said that Microsoft's emails and a blog post about the changes also failed to mention the classic plans.
These omissions, the ACCC argues, breached Australia's consumer law by denying customers the ability to make informed decisions.
"Many Australians rely on Microsoft Office for work, study, and daily life," Cass-Gottlieb noted. "When a company of this size hides key pricing options, consumers lose trust — and often end up paying more than necessary."
The ACCC is seeking penalties, injunctions, and compensation for affected subscribers.
Under Australian consumer law, Microsoft could face fines of up to A$50 million per breach, or 30% of its local turnover if the financial gain cannot be precisely calculated.
According to ABC News, Microsoft responded in a brief statement, saying it is reviewing the ACCC's claims. "Consumer trust and transparency are top priorities for Microsoft," a spokesperson said.
"We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards."
Originally published on vcpost.com
