On Monday, Australia’s competition watchdog filed a lawsuit against Microsoft, claiming the company misled millions of customers into paying more for Microsoft 365 after bundling it with its AI tool, Copilot. The Australian Competition and Consumer Commission (ACCC) stated that since October 2024, around 2.7 million users were led to believe they had to upgrade to higher-priced personal and family plans that included Copilot.
Following the inclusion of Copilot, the annual subscription cost for the Microsoft 365 personal plan rose by 45% to A$159 ($103.32), while the family plan's price went up by 29% to A$179, according to the ACCC.
The ACCC alleged that Microsoft did not clearly inform users about the availability of a cheaper “classic” plan without Copilot. The regulator said this option was only disclosed once customers began the cancellation process, a practice it argued violated Australian consumer law by withholding key information and creating a misleading impression of choices.
According to the ACCC, Microsoft’s prior communications, including emails and a blog post, only mentioned that prices would rise at the next auto-renewal, without highlighting the more affordable alternative. A Microsoft spokesperson said the company is reviewing the ACCC’s claims in detail.
The ACCC is seeking penalties, consumer compensation, injunctions, and costs from both Microsoft Australia Pty Ltd and its U.S. parent, Microsoft Corp. The regulator noted that for each breach, the maximum penalty under Australian consumer law could be A$50 million, three times the benefits gained, or 30% of the company’s adjusted turnover during the breach period if the benefit value cannot be determined.