Australia Takes Microsoft to Court Over Alleged Misleading AI Subscription Pricing

Australia’s competition regulator has launched court action against Microsoft, accusing the tech giant of misleading approximately 2.7 million Microsoft 365 users by bundling its AI assistant Copilot into subscription plans and inflating prices without clear disclosure of cheaper alternatives.

According to the Australian Competition and Consumer Commission (ACCC), from October 2024, Microsoft introduced Copilot into its personal and family plans and raised subscription fees by 45 % for individuals and 29 % for family plans. The ACCC claims Microsoft failed to inform customers that a lower-cost option — a “classic” plan without Copilot — remained available, only revealing it during cancellation processes.

The regulator argues that Microsoft’s emails and public communications suggested users had only two choices: accept the Copilot integration with a price hike or cancel their subscriptions. By withholding the classic option, the ACCC says Microsoft denied consumers the opportunity to make an informed choice.

Microsoft responded that it is reviewing the ACCC’s claim in detail and emphasized its commitment to transparency and customer trust.

The ACCC is seeking remedies that include financial penalties, consumer refunds, injunctions, and legal costs. Under Australian consumer law, the maximum penalty for such a breach can reach A$50 million, or higher depending on the benefits obtained or a percentage of adjusted turnover.