The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings against Microsoft Corporation and its Australian subsidiary, alleging that the tech giant misled approximately 2.7 million Australian consumers regarding subscription options and price increases following the integration of its AI assistant, Copilot, into Microsoft 365 plans. ([accc.gov.au](https://www.accc.gov.au/media-release/microsoft-in-court-for-allegedly-misleading-millions-of-australians-over-microsoft-365-subscriptions?utm_source=openai))
According to the ACCC, since October 31, 2024, Microsoft informed subscribers of Microsoft 365 Personal and Family plans with auto-renewal enabled that they must either accept the integration of Copilot—accompanied by higher subscription fees—or cancel their subscription. The annual subscription price for the Microsoft 365 Personal plan increased by 45% from A$109 to A$159, while the Family plan saw a 29% rise from A$139 to A$179. ([accc.gov.au](https://www.accc.gov.au/media-release/microsoft-in-court-for-allegedly-misleading-millions-of-australians-over-microsoft-365-subscriptions?utm_source=openai))
The ACCC alleges that Microsoft’s communications omitted the existence of a “Classic” plan, which allowed subscribers to retain their existing features without Copilot at the previous lower price. This option was only disclosed to consumers who initiated the cancellation process, a design choice the regulator argues breaches Australian Consumer Law by failing to disclose material information and creating a false impression of available choices. ([accc.gov.au](https://www.accc.gov.au/media-release/microsoft-in-court-for-allegedly-misleading-millions-of-australians-over-microsoft-365-subscriptions?utm_source=openai))
Gina Cass-Gottlieb, Chair of the ACCC, stated, “We will allege in Court that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans.” ([accc.gov.au](https://www.accc.gov.au/media-release/microsoft-in-court-for-allegedly-misleading-millions-of-australians-over-microsoft-365-subscriptions?utm_source=openai))
The ACCC is seeking penalties, consumer redress, injunctions, and costs from Microsoft. Under Australian Consumer Law, the maximum penalty for each breach is the greater of A$50 million, three times the total benefits obtained, or 30% of the corporation’s adjusted turnover during the breach period. ([accc.gov.au](https://www.accc.gov.au/media-release/microsoft-in-court-for-allegedly-misleading-millions-of-australians-over-microsoft-365-subscriptions?utm_source=openai))
A Microsoft spokesperson responded, stating that the company is reviewing the ACCC’s claim in detail and remains committed to working constructively with the regulator to ensure compliance with all legal and ethical standards. ([accc.gov.au](https://www.accc.gov.au/media-release/microsoft-in-court-for-allegedly-misleading-millions-of-australians-over-microsoft-365-subscriptions?utm_source=openai))
This case underscores the importance of transparent communication in subscription services, particularly when introducing new features that affect pricing. The outcome may have significant implications for how tech companies manage and disclose changes to their subscription models in Australia.