Australia’s competition watchdog has taken legal action against Microsoft, accusing the tech giant of misleading millions of customers into paying more for its Microsoft 365 software following the integration of its artificial intelligence tool, Copilot.
The Australian Competition and Consumer Commission (ACCC) claimed that since October 2024, Microsoft led about 2.7 million users to believe they needed to upgrade to more expensive personal and family plans that included Copilot. The regulator noted that prices for Microsoft 365 personal subscriptions rose by 45% to A$159 ($103), while family plans increased by 29% to A$179.
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According to the ACCC, Microsoft failed to clearly inform customers that a cheaper “classic” version of Microsoft 365—without Copilot—remained available. The option to retain the cheaper plan was reportedly disclosed only during the cancellation process, which the watchdog said created a misleading impression and violated Australian consumer law.
Microsoft’s communications, including emails and blog posts, allegedly omitted mention of the cheaper alternative, informing users only that prices would rise upon auto-renewal. In response, a Microsoft spokesperson said the company is reviewing the regulator’s claims in detail.
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The ACCC is seeking penalties, consumer compensation, and injunctions against Microsoft Australia Pty Ltd and its U.S. parent company. The regulator stated that penalties for breaches of Australian consumer law could reach up to A$50 million per violation or 30% of the company’s adjusted turnover during the breach period, depending on the Court’s findings.