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The competition watchdog announced on Monday that it had filed papers in the Federal Court. The Australian Competition and Consumer Commission (ACCC) alleges Microsoft misled customers because there was an undisclosed third option that would have been $40 to $50 cheaper for personal and family plan users who did not want to use Microsoft’s AI Copilot feature. “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,” ACCC chair Gina Cass-Gottlieb said. “We’re concerned that Microsoft’s communications denied its customers the opportunity to make informed decisions about their subscription options.” The ACCC will allege Microsoft deliberately left out reference to its “classic” plans until after subscribers initiated the cancellation process so as to increase the number of consumers on more expensive Copilot-integrated plans. Microsoft Australia is yet to issue a statement about the lawsuit. The affected customers were using Microsoft 365 personal and family subscriptions. In October 2024, Microsoft told customers who had auto-renewal enabled that they must accept the integration of Copilot and pay a higher price for their plan. The annual personal plan was bumped up from $109 to $159, and the family plan went up from $139 to $179. The ACCC says consumer reports and commentary on Reddit formed the basis of its investigation into the way the price increase was communicated. Screenshots provided by the competition watchdog show the “classic” subscription option – without AI – only became clear as an option to customers once they had begun to cancel their plan. The ACCC will be seeking orders including penalties, injunctions, declarations, consumer redress and costs.
