The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against Microsoft, accusing the tech giant of misleading around 2.7 million Australians into paying for its Copilot AI assistant as part of the Microsoft 365 subscription service.
According to the ACCC, Microsoft made customers believe that upgrading to the new AI-powered plan was necessary to continue using Microsoft 365, even though they could have stayed on their existing plans at the same price without Copilot. The regulator claims Microsoft deliberately designed its communications to hide this option, prompting many users to pay higher subscription fees unnecessarily.
The lawsuit follows an investigation triggered by multiple complaints from consumers. Microsoft 365, previously known as Office 365, offers popular productivity tools such as Word, Excel, PowerPoint, Teams, and OneDrive through a subscription model.
In Australia, the Copilot integration was completed on October 31, 2024, as part of a global rollout that continued into 2025. From that point, subscribers renewing their plans received emails suggesting that the new AI-integrated tier was the only option available. The ACCC found that customers could only see the choice to keep their existing plan if they began the cancellation process — something most users would not think to do if they simply wanted to renew their subscription.
As a result, Microsoft 365 Personal users faced a 45% price increase, while Family plan subscribers saw prices rise by 29%. The ACCC argues that this conduct breached several sections of the Australian Consumer Law, including misleading or deceptive conduct and false representations about pricing, necessity, and conditions of service.
The regulator is now asking the Federal Court of Australia to impose civil penalties, order compensation for affected customers, and issue injunctions to prevent similar practices in the future.
Given that Microsoft’s communication approach for the Copilot rollout was similar in other countries, the ACCC’s case could set a precedent and lead to similar legal actions internationally.
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In response, a Microsoft spokesperson told BleepingComputer, “Consumer trust and transparency are top priorities for Microsoft, and we are reviewing the ACCC’s claim in detail. We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards.”
