Microsoft Faces Legal Action for Allegedly Misleading Australian Consumers
Australia’s competition watchdog, the Australian Competition and Consumer Commission (ACCC), has filed a lawsuit against Microsoft, accusing the tech giant of misleading nearly 2.7 million Australian customers. The ACCC claims Microsoft bundled its AI assistant, Copilot, into its Microsoft 365 Personal and Family plans and raised prices by up to 45 percent—without clearly informing users about a cheaper alternative that excluded Copilot.
Price Increases and Concealed “Classic” Plans
Starting in October 2024, Microsoft reportedly raised the annual cost of its Microsoft 365 Personal plan from A$109 to A$159, and its Family plan from A$139 to A$179. The regulator argues that customers were presented with only two choices: accept the higher-priced, AI-enhanced plan or cancel their subscription. However, a “classic” plan without Copilot was still available at the original price—though users only discovered it when attempting to cancel.
ACCC Chair Gina Cass-Gottlieb described this practice as “deliberately hiding” the cheaper option to push customers toward the upgraded plan. She warned that when large corporations obscure pricing options, consumers lose trust and end up overpaying.
In response, Microsoft stated that consumer trust and transparency remain top priorities and that the company is reviewing the ACCC’s claims.
Legal Stakes and Industry Implications
The case centers on Australia’s consumer law, which bans misleading conduct and requires transparent pricing disclosures. The ACCC seeks penalties, injunctions, declarations, and consumer compensation. Potential fines could reach up to A$50 million per violation or as much as 30 percent of Microsoft’s adjusted turnover if applicable.
Background reports reveal that Microsoft had tested similar AI-linked price adjustments in other Asia-Pacific regions. Many Australian users reportedly learned through Reddit discussions that the cheaper, Copilot-free plan was still active but hidden within cancellation menus.
A Landmark Test for AI Monetization Transparency
This lawsuit could become one of Australia’s most significant challenges to how tech companies bundle and price AI-powered features. If the ACCC prevails, Microsoft may have to pay heavy fines, refund affected consumers, and revise its pricing disclosures.
Beyond the immediate legal risk, the outcome could set a global precedent for how technology firms integrate AI into subscription models. Regulators worldwide are increasingly focused on ensuring that consumers clearly understand the value—and cost—of AI features before committing to higher-priced plans.
