Australia sues Microsoft over misleading Copilot AI pricing
What's the story
Australia's competition watchdog, the Australian Competition and Consumer Commission (ACCC), has sued tech giant Microsoft. The lawsuit accuses the company of misleading millions of customers into paying higher prices for its Microsoft 365 software after bundling it with artificial intelligence tool Copilot. The ACCC alleges that from October 2024, Microsoft misled around 2.7 million customers by suggesting they had to switch to pricier personal and family plans that included Copilot.
Allegations
Microsoft didn't inform users about cheaper plan
The ACCC claims that Microsoft didn't clearly inform its users about an existing cheaper "classic" plan without Copilot. The option to retain this cheaper plan was only revealed when consumers started the cancellation process. This, the regulator argues, violates Australian consumer law by not disclosing material information and creating a false impression of available choices.
Price increase
Price hikes for personal and family plans
After Copilot's integration, the annual subscription price for the Microsoft 365 personal plan jumped by 45% to A$159 ($103.32). The family plan also saw a price hike of 29%, now costing A$179. The ACCC said Microsoft's previous communications through emails and blog posts didn't mention the cheaper alternative, only informing customers about upcoming price increases at their next auto-renewal.
Court action
ACCC is seeking penalties from Microsoft
The ACCC is seeking penalties, consumer redress, injunctions, and costs from both Microsoft Australia and its US parent company, Microsoft Corp. Under Australian consumer law, a company can be fined up to A$50 million for each breach, three times the benefits obtained that were reasonably attributable, or 30% of adjusted turnover if the benefit cannot be quantified. "Any penalty that might apply to this conduct is a matter for the Court to determine," the regulator said.