Australia’s competition regulator has launched a major legal battle against Microsoft, accusing the tech giant of misleading millions of customers about its AI assistant, Copilot, and allegedly pressuring them into paying higher subscription fees.
The Australian Competition and Consumer Commission (ACCC) filed the lawsuit on Monday, claiming that Microsoft Australia and its US parent company made “false or misleading” representations to about 2.7 million Microsoft 365 users across the country.
According to the regulator, the company told customers that they only had two options either upgrade to Copilot-integrated Microsoft 365 plans at a higher cost or cancel their existing subscriptions.
However, a third, cheaper option that allowed users to stay on the older “Classic” Microsoft 365 plans was reportedly concealed from them.
“Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans,”
said ACCC Chair Gina Cass-Gottlieb.
The regulator said the alleged deception began on October 31, 2024, when Microsoft rolled out new AI-powered plans integrating Copilot into its productivity suite.
These updated subscriptions cost between 29% and 45% more than the standard ones.
Moreover, the ACCC argued that Microsoft’s conduct was particularly concerning given the widespread reliance on Office apps such as Word, Excel, and Outlook in both professional and personal settings.
“Office apps are essential in many people’s lives, making it unlikely that customers would easily choose to cancel their subscriptions,”
Cass-Gottlieb added.
Potential fines exceed A$50 million per breach
In its filing, the ACCC said it is seeking penalties, injunctions, consumer redress, and legal costs, adding that Microsoft could face fines of more than A$50 million (US$30 million) for each proven breach of consumer law.
Furthermore, the commission emphasised that digital service providers must ensure clarity and honestywhen communicating with customers, especially when price changes or AI features are involved.
“Consumers must be given fair and transparent choices. Hidden options undermine trust,”
the commission stated.
Meanwhile, Microsoft has not publicly responded to the allegations.
A company spokesperson declined to comment when approached by media outlets on Monday.
