Microsoft Accused of Misleading Australians

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The consumer watchdog has taken legal action against technology giant Microsoft, alleging it deliberately misled 2.7 million Australians over subscription costs for its AI products and other software so they would remain on more expensive plans.

On Monday, the Australian Competition and Consumer Commission (ACCC) commenced proceedings in the Federal Court against Microsoft Australia and its parent company, Microsoft Corporation, over how it communicated price increases to customers of its Copilot AI assistant and Microsoft 365 plans, including software such as Word, Excel and PowerPoint.

The ACCC has launched legal action against US software giant Microsoft.

The ACCC alleges that since October 31, 2024, “Microsoft has told subscribers of Microsoft 365 Personal and Family plans with auto-renewal enabled that to maintain their subscription, they must accept the integration of Copilot and pay higher prices for their plan, or, alternatively, cancel their subscription”.

The ACCC said that following the integration of Copilot, the annual subscription price of the Microsoft 365 Personal plan increased by 45 per cent from $109 to $159, while the annual subscription price for the Microsoft 365 Family plan increased by 29 per cent from $139 to $179.

This information was false or misleading, the ACCC alleges, because there was “an undisclosed third option” – the Microsoft 365 Personal or Family Classic plans – which allowed subscribers to retain the features of their existing plan, without Copilot, at the previous lower price.

“Microsoft’s communication with subscribers did not refer to the existence of the ‘Classic’ plans, and the only way subscribers could access them was to begin the process of cancelling their subscription,” the consumer watchdog said.

Customers needed to navigate to the subscriptions section of their Microsoft account, select cancel subscription, and only on a following page, were they given the option to instead move to the classic plan.

ACCC chair Gina Cass-Gottlieb said that after a detailed investigation, the watchdog was alleging that “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”.

Cass-Gottlieb said Microsoft Office software included in the company’s 365 subscriptions “are essential in many people’s lives and given there are limited substitutes to the bundled package, cancelling the subscription is a decision many would not make lightly”.

“We believe many Microsoft 365 customers would have opted for the Classic plan had they been aware of all the available options,” she said.

Microsoft was contacted for comment.