Microsoft Australia is facing federal court action for allegedly misleading 2.7 million Australians into purchasing a more expensive Microsoft 365 subscription plan that included its AI bot, Copilot.
The Australian Competition and Consumer Commission (ACCC) announced the proceedings, citing allegedly false or misleading communications. In October last year, Microsoft sent two emails and published a blog post informing users on auto-renewal for Microsoft 365 Personal and Family plans that they had to accept Copilot and pay higher fees to maintain their subscription—or cancel.
The ACCC alleges Microsoft failed to mention a third option: retaining the existing plan without Copilot at the lower “Classic” plan price. Users reportedly only saw the option to switch to the Classic plan late in the cancellation process. As a result, non-canceling users saw the annual personal plan price rise 45% from $109 to $159, and the family plan increase 29% from $139 to $179.
ACCC Chair Gina Cass-Gottlieb stated that Microsoft “deliberately” concealed the Classic plan to increase subscriptions to the more expensive Copilot-integrated plans. She added that Microsoft Office apps are essential for many users, and the lack of transparency prevented informed subscription decisions.
Microsoft 365 Personal and Family plans include apps like Word, Excel, PowerPoint, OneNote, Outlook, Teams, SharePoint, and OneDrive cloud services. The ACCC’s case does not involve Business or Enterprise plans.
Following investigations prompted by user reports and Reddit posts, the ACCC claims millions of Australians may have suffered economic harm. The commission is seeking penalties, injunctions, declarations, consumer redress, and costs, with corporations in breach of consumer law facing up to $50 million in fines.
Microsoft said it is reviewing the ACCC’s claim and is committed to ensuring its practices comply with legal and ethical standards. A company spokesperson stated, “Consumer trust and transparency are top priorities for Microsoft, and we remain committed to working constructively with the regulator.”
