Microsoft sued for misleading millions of Australians over 365 subscriptions
▼ Summary
– The ACCC is suing Microsoft for allegedly misleading 2.7 million Australian customers by not disclosing a cheaper “Classic” plan option without Copilot when communicating subscription changes.
– Microsoft told auto-renewing subscribers they must accept a higher-priced Copilot-integrated plan or cancel, concealing the Classic plan until customers initiated the cancellation process.
– Price increases were substantial, with the Personal plan rising 45% from $109 to $159 annually and the Family plan increasing 29% from $139 to $179 after Copilot integration.
– The ACCC alleges Microsoft’s emails and blog post were misleading because they omitted the Classic plan option, denying customers the ability to make informed decisions about their subscriptions.
– The ACCC is seeking court orders including penalties, injunctions, and consumer redress for affected subscribers who may have suffered economic harm from automatic renewals at higher prices.
Microsoft faces legal action in Australia for allegedly misleading millions of customers about Microsoft 365 subscription changes and price increases tied to its Copilot AI integration. The Australian Competition and Consumer Commission (ACCC) has filed proceedings in the Federal Court against Microsoft Australia and its parent company, Microsoft Corporation. The regulator claims approximately 2.7 million Australian subscribers were given false or misleading information regarding their options when Copilot was added to Microsoft 365 Personal and Family plans.
According to the ACCC, starting October 31, 2024, Microsoft informed subscribers with active auto-renewal that they must either accept the new Copilot features along with a significant price hike or cancel their subscription entirely. The communications allegedly failed to disclose a third option: switching to a “Classic” plan that retained all previous Microsoft 365 features without Copilot at the original, lower price. This Classic plan was only revealed to users who began the cancellation process, appearing only after they selected “Cancel subscription” in their account management portal.
ACCC Chair Gina Cass-Gottlieb stated, “Our investigation indicates Microsoft deliberately concealed the Classic plans to push more consumers onto costlier Copilot-integrated subscriptions. Many people rely heavily on Microsoft Office applications, and with few comparable alternatives available, cancelling is not a simple choice. We believe Microsoft’s actions prevented customers from making fully informed decisions about their subscriptions.”
Following the Copilot integration, annual subscription costs saw sharp increases, with the Personal plan jumping 45% from $109 to $159 and the Family plan rising 29% from $139 to $179. The ACCC’s case focuses on two emails and a blog post Microsoft sent to auto-renewing subscribers, which allegedly presented the expensive Copilot plan or cancellation as the only available paths forward.
The regulator asserts these communications were misleading because they omitted any reference to the Classic plan option. Consumer reports and online forum discussions helped alert the ACCC to the issue, particularly regarding how the Classic plan only appeared during the cancellation workflow.
The ACCC is seeking court orders including financial penalties, injunctions, declarations, consumer redress, and costs. They believe affected consumers suffered economic harm by automatically renewing at higher prices without knowledge of the cheaper alternative. Subscribers who haven’t renewed since July 8, 2025 might still access the Classic plan by initiating cancellation, though Microsoft controls these options and could modify them at any time.
For context, Microsoft Australia operates as a subsidiary of the U.S.-based Microsoft Corporation. The ACCC alleges Microsoft U.S. prepared the disputed communications, which Microsoft Australia adopted as the local subscription seller. This case specifically involves Personal and Family plans for home users, excluding business and enterprise subscriptions.
Microsoft 365 subscriptions provide access to productivity software like Word, Excel, and PowerPoint, along with collaboration tools such as Outlook and Teams, plus cloud storage via OneDrive. Copilot, Microsoft’s generative AI assistant, launched in 2023 and was integrated into consumer 365 plans in Australia on October 31, 2024, with global rollout and varying price increases following in January 2025.
Digital economy practices remain an ACCC enforcement priority. Potential penalties for Australian Consumer Law breaches could reach $50 million, three times the value of obtained benefits, or 30% of a corporation’s adjusted turnover during the violation period. Any final penalties would be determined by the Federal Court based on its findings.
(Source: ITWire Australia)
