The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings against Microsoft, alleging that the tech giant misled approximately 2.7 million users in Australia regarding subscription costs for Microsoft 365. The lawsuit claims that following the integration of its AI assistant, Copilot, Microsoft pushed consumers into paying higher prices, causing economic harm to users.
Named in the lawsuit are both Microsoft Corporation in the United States and its Australian subsidiary. The ACCC highlights that as of October 31, 2024, subscribers of Microsoft 365 Personal and Family plans were presented with a choice to accept the integration of Copilot, alongside a significant price hike, or to cancel their subscriptions. However, there was a critical element missing from these communications: an undisclosed option to maintain the existing features without Copilot at the original price, through the Microsoft 365 Personal or Family Classic plans. It was reported that this alternative was only revealed when users attempted to cancel their existing subscriptions.
The price of the new Microsoft 365 Personal plan increased by nearly 45 percent, from AU$109.00 to AU$159.00 annually. ACCC Chair Gina Cass-Gottlieb raised concerns that Microsoft’s communication strategy denied many customers the ability to make informed choices regarding their subscriptions. It is suggested that had the classic, lower-priced plans been clearly communicated, many consumers would have chosen them over the more expensive options.
In constructing their case, the ACCC examined a variety of consumer complaints and online discussions. The body also reviewed internal communications, such as emails announcing the impending price changes and a blog post promoting the new features. The ACCC is seeking to impose significant penalties on Microsoft, which could include fines, injunctions, and consumer compensation. Under Australian Consumer Law, a breach could result in maximum penalties reaching AU$50 million, or calculated according to the benefits obtained or the corporation’s adjusted turnover during the period of infringement.
Microsoft responded to these allegations via email, indicating that the company is carefully reviewing the claims. The oversight role of the ACCC is crucial in promoting fair competition and protecting consumer rights in Australia. Read more about this unfolding legal challenge here.