Australia takes Microsoft to court over misleading AI plan

Watchdog accuses Microsoft of deceptive conduct

The Australian Competition and Consumer Commission (ACCC) said it filed a lawsuit in the Federal Court against Microsoft Australia and its parent company, Microsoft Corp.

According to the ACCC, the tech giant made “false or misleading” claims to around 2.7 million Australians subscribed through auto-renewal to Microsoft 365 personal and family plans.

Hidden “Classic” option not disclosed

The ACCC said Microsoft told subscribers they had only two choices: pay more for Copilot-integrated Microsoft 365 or cancel their subscriptions.

However, there was a third, less visible option—the ability to continue with existing “Classic” plans at the original price, revealed only after users initiated the cancellation process.

“Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence to push more consumers toward the higher-priced Copilot packages,” said ACCC chair Gina Cass-Gottlieb.

Price difference and potential penalties

Microsoft 365 plans with Copilot cost between 29 and 45 percent more than standard subscriptions. The ACCC claims this pricing strategy misled users since October 31, 2024, taking advantage of the fact that Microsoft’s Office suite has few viable alternatives.

The commission is seeking penalties, injunctions, consumer compensation, and legal costs. Microsoft could face fines of at least A$50 million (US$30 million) per breach if found guilty.

Microsoft has not yet responded to requests for comment.