Microsoft Faces Australian Lawsuit Over Misleading AI-Driven Price Hikes on Microsoft 365 Subscriptions
In a significant legal challenge, the Australian Competition and Consumer Commission (ACCC) has sued Microsoft Australia and its US parent company, alleging the tech giant misled about 2.7 million Australian users by concealing cheaper subscription options when integrating its AI assistant, Copilot, into Microsoft 365 plans. The ACCC claims Microsoft presented customers with only two choices: pay higher prices for Copilot-enabled plans or cancel their subscriptions, without clearly disclosing that existing, lower-cost plans without AI features remained available.
This lawsuit highlights a 45% price surge for the Microsoft 365 Personal plan (now A$159 annually) and a 29% rise for the Family plan (A$179 annually) after Copilot’s rollout. According to the ACCC, consumers only learned about the cheaper “classic” plans after initiating cancellation. This omission created a false impression about available options, effectively pushing users toward pricier subscriptions bundled with AI capabilities.
The controversy underscores a broader issue of transparency and consumer rights in the era of AI integration in software products. Microsoft’s Copilot, powered by OpenAI’s GPT models, is designed to simplify complex workflows, but the ACCC’s legal filing suggests the rollout leveraged consumer confusion about subscription choices to inflate revenues.
Microsoft responded by emphasizing its commitment to consumer trust and legal compliance, promising cooperation with the regulator. Meanwhile, experts warn the case could influence how tech companies market AI-enhanced products globally, particularly regarding clear communication of pricing structures.
Glossary:
- ACCC: Australian Competition and Consumer Commission, a government regulatory body overseeing consumer protection and competition.
- Microsoft 365: Subscription-based productivity software suite by Microsoft, including Office applications and cloud services.
- Copilot: Microsoft’s AI assistant integrated into Microsoft 365, leveraging OpenAI’s GPT technology to enhance user productivity.
- Subscription Plan: A paid service model where users pay recurring fees to access software and updates.
- Classic Plan: The original Microsoft 365 subscription without AI features at a lower price point.
Source: https://www.afr.com/technology/accc-alleges-microsoft-misled-users-into-price-hikes-for-ai-assistant-20251027-p5n5ic
