Australia’s competition watchdog sues Microsoft for allegedly misleading 2.7 million users into paying inflated Microsoft 365 subscription prices after bundling its Copilot AI tool.
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| Australia’s ACCC has taken Microsoft to court, claiming the tech giant misled millions with AI Copilot pricing tactics — a case that could reshape global AI product marketing. Image: CH |
Sydney, Australia — October 27, 2025:
Australia’s competition regulator has taken Microsoft to court, accusing the U.S. tech giant of deceiving millions of Australian users into paying higher prices for its Microsoft 365 subscriptions after bundling the artificial intelligence tool Copilot.
The Australian Competition and Consumer Commission (ACCC) alleges that since October 2024, Microsoft misled about 2.7 million customers by implying they needed to upgrade to higher-priced Microsoft 365 Personal and Family plans that included Copilot. According to the regulator, Microsoft failed to clearly tell users that a cheaper “classic” version of Microsoft 365 — without Copilot — remained available.
Following the integration, the annual subscription price for the Microsoft 365 Personal plan jumped 45% to A$159 (US$103.32), while the Family plan rose 29% to A$179, the ACCC said. Consumers reportedly only discovered the cheaper option after initiating cancellation — a design the regulator claims breached Australian consumer law by omitting key information and creating a misleading impression of available choices.
The ACCC also pointed out that Microsoft’s customer emails and blog posts merely informed users that price increases would apply at renewal, without mentioning any lower-cost alternative.
The ACCC is seeking penalties, consumer redress, injunctions, and costs from Microsoft Australia Pty Ltd and its U.S. parent company. Under Australian law, penalties could reach A$50 million per breach, or up to 30% of Microsoft’s adjusted turnover if benefits cannot be quantified — potentially among the largest consumer penalties in the country’s history.
In a statement, Microsoft said it was “reviewing the ACCC’s claim in detail.” The company has not yet provided a public defense of its Copilot pricing strategy.
The case underscores a growing global tension between AI innovation and consumer transparency. As tech firms embed generative AI tools like Copilot into subscription services, regulators are increasingly questioning whether consumers are being fairly informed about price changes and product alternatives.
If the ACCC succeeds, the ruling could set a major precedent — not just for Microsoft, but for all technology companies that automatically integrate AI features into existing products.
The lawsuit aligns with broader regulatory trends in Europe and the United States, where authorities are scrutinizing whether AI-driven upgrades justify steep price increases. Legal experts say the case could become a benchmark for global consumer protection in the AI era, defining how companies disclose optional versus mandatory AI features.
For Australian consumers, the dispute centers on a simple issue: choice. Did Microsoft clearly present all available options before charging more for Copilot integration?
For the world’s regulators, however, the case represents something larger — a test of whether AI-enhanced business models can coexist with long-standing principles of consumer fairness. The outcome could reshape how the tech industry markets, prices, and communicates the value of AI tools in everyday software.