The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against Microsoft Corporation accusing the company of misleading approximately 2.7 million Australian consumers into upgrading to more expensive Microsoft 365 plans bundled with its AI assistant, Copilot. According to the ACCC, Microsoft failed to clearly disclose a lower-cost “Classic” subscription option that excluded Copilot, effectively pressuring users into accepting the pricier tier.
As early as October 2024, Microsoft began integrating Copilot into its 365 Personal and Family plans and announced annual price increases of about 45 % and 29 % respectively. The regulator alleges that Microsoft presented subscribers only with two apparent choices: pay more for the Copilot-enabled plan or cancel their subscription altogether.
“We allege that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process.”
— ACCC Chair Gina Cass-Gottlieb
Under Australian consumer law, false or misleading representation of goods or services is actionable. The ACCC is seeking civil penalties (which may exceed A$50 million per violation), injunctions, and redress for consumers.
Microsoft 365 Subscriber Communications and Opt-Out Options Under Scrutiny
The ACCC’s legal filing points to two key communications from Microsoft: internal emails and a blog post directed at auto-renewing subscribers. While the messages informed users that pricing would increase and Copilot would be added, they did not clearly highlight the availability of the Classic plan that retained existing features at the previous price.
Microsoft responded by saying: “Consumer trust and transparency are top priorities for Microsoft, and we are reviewing the ACCC’s claim in detail.”
Officials say that only during the cancellation process did users see the option to switch to the Classic plan without Copilot. Because many users avoid canceling subscriptions, the ACCC argues many were steered into the higher-cost path without awareness of alternatives.
Implications for Subscription Business Model and Consumer Rights
The case raises questions about how AI-driven product upgrades are communicated to consumers and the transparency of subscription-model changes. Analysts say the dispute could trigger broader investigations into similar practices in other jurisdictions.
From an operational viewpoint, Microsoft’s integration of Copilot into 365 plans represents a shift toward bundling AI features into traditional productivity suites—a trend likely to influence pricing strategies across the software market. From a regulatory stance, the lawsuit may prompt increased scrutiny on how companies disclose optional features, pricing tiers, and consumer choice.
What Affected Microsoft 365 Subscribers Should Do
Consumers in Australia who were subscribed to Microsoft 365 Personal or Family plans during the affected period should:
- Review renewal communications from October 2024 onward to determine if they were auto-enrolled into the Copilot-enhanced tier.
- Explore whether they retained access to the Classic plan without Copilot at the prior price.
- Monitor upcoming notifications from the ACCC regarding redress or compensation eligibility.
- Review other subscription services to ensure they were offered comparable opt-out or legacy-tier alternatives when pricing changed.
Strategic Takeaways for Tech Companies and Regulators
For technology vendors: changes to subscription pricing, tier structure or bundled features must be clearly communicated, and opt-out or legacy options should be equally visible. Hidden upgrade pathways may expose companies to regulatory action, especially under consumer-protection statutes.
For regulators: the rise of AI features within subscription services may create new layers of complexity in pricing and disclosure obligations. The Australian case may serve as a precedent for examining how AI is introduced within existing service offerings and how consumers are informed of their choices.
