Quick Read
- Australia’s ACCC has filed a lawsuit against Microsoft, alleging millions of Microsoft 365 subscribers were misled into pricier plans after Copilot integration.
- The ACCC claims cheaper ‘Classic’ plans were hidden, only revealed when users initiated cancellation.
- Annual costs for Copilot-enabled plans jumped up to 45%, sparking complaints and regulatory scrutiny.
- Microsoft faces potential multi-million dollar penalties if found guilty of breaching consumer law.
- Legal experts say the case may set a precedent for how tech firms communicate AI upgrades and subscription options.
ACCC Lawsuit: Microsoft’s Copilot Integration Faces Court Scrutiny
In a move that’s sending ripples through the tech world, Australia’s competition regulator—the Australian Competition and Consumer Commission (ACCC)—has taken Microsoft to court, alleging that the global software giant misled millions of Australians into paying more for Microsoft 365 subscriptions with its new AI assistant, Copilot. The legal action, officially filed in the Federal Court, marks a significant test of how technology companies communicate changes and choices to their subscribers as artificial intelligence becomes increasingly embedded in everyday digital tools.
Millions Allegedly Misled: The Heart of ACCC’s Case
At the core of the ACCC’s lawsuit is a claim that Microsoft’s rollout of Copilot in October 2024 was not just about technological innovation, but about how it presented the upgrade to its users. The regulator alleges that approximately 2.7 million Australians were led to believe they had only two options: pay more for the new AI-powered plan, or cancel their subscriptions entirely. What most didn’t know, according to the ACCC, was the existence of a third, cheaper choice—the “Classic” Microsoft 365 plan without Copilot. This lower-priced option was reportedly hidden, only surfacing for subscribers who initiated cancellation, a design and communication strategy the ACCC calls misleading and manipulative (France24).
“Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process,” ACCC Chair Gina Cass-Gottlieb stated, underscoring the commission’s belief that the company’s approach was designed to push consumers toward pricier plans.
Price Hikes and Subscription Confusion: How Copilot Changed the Landscape
The addition of Copilot—an AI tool built to help users write, organize, and manage digital tasks—was not just a technical upgrade; it came with substantial price increases. Annual costs for personal plans reportedly rose by 45%, to A$159 (about US$103), while family plans jumped 29%, to A$179. Microsoft’s communications, via emails and blog posts, informed users about higher fees at renewal, but, crucially, failed to mention that sticking with the existing Classic plan was still possible. The ACCC says this omission caused widespread confusion and led many to accept higher charges unnecessarily (RegTech Times).
For millions of Australians—individuals, businesses, and schools—Microsoft 365 is essential. The software underpins daily work and communication, making the prospect of cancellation daunting. “Given there are limited substitutes to Microsoft’s bundled productivity suite, cancellation is a decision many would not make lightly,” Cass-Gottlieb observed. The ACCC argues that Microsoft exploited this dependence, framing the upgrade as a necessity rather than a choice.
Legal Stakes: Potential Penalties and Industry Impact
The ACCC is seeking robust remedies: financial penalties, injunctions to prevent future misconduct, consumer refunds, and reimbursement for legal costs. Under Australian consumer law, penalties for misleading conduct can be severe—up to A$50 million (US$30 million) for each breach, or higher depending on the benefit gained from the violation. If the court rules against Microsoft, the company could face a multi-million-dollar payout and be forced to revise its marketing and billing practices in Australia (Australian Financial Review).
Microsoft, for its part, has stated that it is carefully reviewing the ACCC’s claims and will cooperate with authorities, though it has not issued any detailed public response to the allegations.
Global Implications: AI Integration and Consumer Choice Under the Microscope
This lawsuit is not just about one company or country. Around the world, regulators are grappling with the rapid adoption of AI in consumer technology, and how companies communicate new features, pricing, and subscription options. Legal experts see the Australian case as a potential precedent. “As AI becomes embedded in common productivity software, companies must communicate clearly about pricing and product options,” noted Dr. Laura Bennett, a technology law expert at the University of Sydney. She believes the outcome could influence how tech firms globally approach AI integration in subscription models.
The ACCC itself has a history of challenging major tech companies over transparency and misleading practices, previously taking action against Google and Meta. Analysts say the Microsoft case underscores the delicate balance regulators must strike between fostering innovation and protecting consumers. AI tools like Copilot promise greater efficiency and productivity, but they also introduce new layers of complexity in how users navigate subscriptions and costs.
“Consumers should never feel pressured into paying for technology they didn’t knowingly choose,” Bennett emphasized. The case puts a spotlight on whether tech giants are truly offering fair choices—or simply leveraging their dominance to drive revenue.
What’s Next? Court Proceedings and Consumer Advice
The Federal Court is expected to schedule its first hearing in the coming months. Until a verdict is reached, the ACCC urges Microsoft 365 subscribers in Australia to closely review their accounts and billing, especially to confirm whether they are being charged for Copilot features they did not intend to purchase. The outcome could see Microsoft compensating affected users and revising its approach to subscription communication and design.
As the legal process unfolds, industry observers, businesses, and millions of consumers will be watching closely—not just for the immediate verdict, but for the broader signal it sends about AI integration, transparency, and the rights of digital subscribers in an era of rapid technological change.
The ACCC’s legal challenge against Microsoft is more than a local dispute—it’s a critical test of transparency and fairness in the age of AI-driven software. If the court rules that Microsoft misled millions through design and communication, tech giants everywhere may need to rethink how they present subscription choices as AI becomes the norm, not the exception.