Australia’s competition regulator on Monday filed a lawsuit against Microsoft, accusing the tech giant of misleading around 2.7 million customers into paying more for its Microsoft 365 software after bundling it with the artificial intelligence tool Copilot. The Australian Competition and Consumer Commission (ACCC) said the company misrepresented the need to switch to higher-priced personal and family plans starting in October 2024.
According to the ACCC, the integration of Copilot increased the annual subscription cost of the Microsoft 365 personal plan by 45% to A$159 ($103.32) and the family plan by 29% to A$179. The regulator claims Microsoft failed to clearly inform users that a cheaper “classic” plan without Copilot remained available, only revealing this option during the cancellation process—a practice the ACCC says breached Australian consumer law.
The watchdog argued that Microsoft’s prior communications, including emails and blog posts, did not mention the lower-cost alternative and created a false impression about available choices. Microsoft, in an emailed statement, said it was reviewing the ACCC’s claims in detail.
The ACCC is seeking penalties, consumer redress, injunctions, and legal costs from Microsoft Australia Pty Ltd and its U.S. parent, Microsoft Corp. Under Australian law, the maximum penalty for each breach can be the greater of A$50 million, three times the benefits gained, or 30% of the company’s adjusted turnover during the breach period if benefits cannot be quantified. The ACCC said any penalties would ultimately be determined by the courts.
