The Australian Competition and Consumer Commission (ACCC) has taken legal action against Microsoft, accusing the tech giant of misleading approximately 2.7 million Australians regarding their Microsoft 365 subscriptions. The lawsuit, filed in the Federal Court, alleges that Microsoft failed to properly inform customers about their subscription options following the integration of its AI assistant, Copilot, into Microsoft 365 plans.
The ACCC claims that since late last year, Microsoft informed subscribers of certain plans that they needed to pay higher prices to continue their subscriptions, which now included Copilot, or they would have to cancel. However, the regulator alleges that Microsoft did not disclose the option for subscribers to retain their current plans, without Copilot, at the existing lower prices.
Regulatory Concerns Over Consumer Transparency
ACCC Chair Gina Cass-Gottlieb criticized Microsoft’s conduct, describing it as “very serious” and emphasizing the importance of consumer transparency. “Following a detailed investigation, the ACCC alleges that Microsoft deliberately hid this third option, to retain the old plan at the old price, in order to increase the uptake of Copilot and the increased revenue from the Copilot integrated plans,” she stated during a press conference.
The ACCC is seeking a significant penalty to underscore that non-compliance with Australian Consumer Law “is not just a cost of doing business.” The regulator’s action is rooted in ensuring that consumers are fully informed about their choices, particularly when it comes to essential services like Microsoft 365, which many Australians rely on for work and personal use.
Microsoft’s Response and Consumer Backlash
In response to the lawsuit, a Microsoft spokesperson told ABC News that the company is reviewing the ACCC’s claims in detail. “Consumer trust and transparency are top priorities for Microsoft,” the spokesperson said. The issue gained attention earlier this year when a customer reported the pricing changes to the ACCC, prompting widespread criticism on online forums from users affected by the price hikes.
According to the ACCC, since October 31, 2024, Microsoft informed subscribers of Microsoft 365 personal and family plans with auto-renewal enabled that they must accept the Copilot integration and pay higher prices or cancel their subscription. The regulator alleges that Microsoft’s communications did not mention the cheaper “classic” plans, which subscribers could only access by initiating the cancellation process.
Implications for Microsoft and Consumers
The ACCC’s lawsuit seeks orders including penalties, injunctions, declarations, consumer redress, and costs. The consumer watchdog argues that millions of Australians may have suffered economic harm due to the automatic renewal of their subscriptions with Copilot integration at a higher price. The annual subscription price of the Microsoft 365 personal plan reportedly increased by 45% from $109 to $159, while the family plan rose by 29% from $139 to $179.
“We allege that Microsoft’s two emails to existing subscribers and the blog post were false or misleading as they conveyed that consumers had to accept the more expensive Copilot-integrated plans, and that the only other option was to cancel,” Ms. Cass-Gottlieb said.
The ACCC’s investigation drew on a significant number of consumer reports and online commentary, highlighting the widespread concern among users. Ms. Cass-Gottlieb emphasized that the proceedings are not about Microsoft’s price changes or new offerings but rather about the lack of transparency in how these changes were communicated to customers.
Looking Ahead: Potential Outcomes and Industry Impact
The ACCC’s legal action against Microsoft underscores the growing scrutiny of tech giants and their business practices, particularly in relation to consumer rights and transparency. The outcome of this case could have significant implications for how companies communicate changes to subscription services and pricing structures.
As the case unfolds, existing Microsoft 365 personal and family subscribers who have not renewed their subscriptions since July 8, 2025, may have the opportunity to revert to their previous plans by following the cancellation process until the classic plan is offered. This development highlights the importance of informed consumer choice and the role of regulatory bodies in safeguarding consumer interests.
The proceedings against Microsoft are a reminder of the delicate balance between innovation, pricing strategies, and consumer rights. As the tech landscape continues to evolve, companies may need to reassess their communication strategies to ensure transparency and maintain consumer trust.
