Australian competition supervisor is suing Microsoft for misleading consumers

The Australian Competition & Consumer Commission (ACCC) has launched a lawsuit against Microsoft Australia and its parent company Microsoft Corporation for misleading 2.7 million Australian consumers.

According to the competition regulator, Microsoft has told subscribers of Microsoft 365 Personal and Family plans with auto-renewal since October 31st, 2024, that they had to pay a higher subscription fee due to the integration of the company’s AI assistant Copilot.

Customers were offered two options: to accept and pay the higher prices for their plan, or to cancel their Microsoft 365 subscription. The subscription fee of the Microsoft 365 Personal plan increased by 45% from $109 to $159. Microsoft’s 365 Family plan increased by 29% from $139 to $179.

However, the Redmond-based tech company neglected to inform its customers that there was a third option: a Microsoft 365 Personal or Family Classic plan, allowing users the features of their current plan at a lower price, but without Copilot.

According to the ACCC, Microsoft never mentioned the existence of the Classic plans. The only way to access these cheaper subscriptions was to begin the process of cancelling their plan.

“We’re concerned that Microsoft’s communications denied its customers the opportunity to make informed decisions about their subscription options, which included the possibility of retaining all the features of their existing plan without Copilot and at the lower price,” ACCC Chair Gina Cass-Gottlieb says in a press release that was published on Monday.

Since October 2024, Microsoft has sent two emails and published a blog post to inform auto-renewing subscribers about the Copilot integration and the impending price increase that would apply at their next renewal. According to the ACCC, these communications were deceptive and confusing because they never mentioned the third option.

“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,” Cass-Gottlieb states.

“All businesses need to provide accurate information about their services and prices. Failure to do so risks breaching the Australian Consumer Law,” she added.

The ACCC claims that 2.7 million Australian consumers may have been misled by Microsoft’s practices. Therefore, the regulator is seeking penalties, injunctions, declarations, consumer redress, and costs. The maximum fine is AU$50 million, three times the proceeds from the offense in question, or up to 30 percent of turnover during the breach period.

Microsoft has not yet responded to the complaint.