Post by : Badri Ariffin

The Australian Competition and Consumer Commission (ACCC) has launched a lawsuit against Microsoft, alleging the company misled millions of Microsoft 365 users into purchasing more expensive plans following the introduction of its AI assistant, Copilot.

According to the ACCC, since October 2024, Microsoft’s pricing adjustments impacted around 2.7 million individual and family users. The regulator asserts that Microsoft suggested users switch to higher-cost plans with Copilot, without adequately disclosing the availability of more affordable, “classic” plans.

After Copilot was rolled out, the personal Microsoft 365 plan saw a significant increase of 45%, reaching A$159 per year, while the family plan rose by 29% to A$179. Reports indicate that many users only became aware of their older, cheaper subscription options when they attempted to cancel their accounts, not through initial communications.

Microsoft's emails and blog updates primarily emphasized auto-renewal price hikes, failing to mention the existence of a lower-cost alternative. The ACCC contends that this lack of information misled customers and violated Australian consumer law.

The regulatory body is pursuing court-imposed penalties, refunds for affected customers, and injunctions to deter future breaches. Under Australian legislation, Microsoft faces fines up to A$50 million for each violation, or 30% of its adjusted revenue if exact financial gains cannot be quantified.

In response, Microsoft stated it is currently reviewing these allegations, reflecting the increasing global scrutiny of tech companies’ pricing strategies and communication methods related to AI product enhancements.

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