Key Takeaways
- The ACCC has sued Microsoft, alleging the company misled about 2.7 million Australians by not revealing a cheaper subscription option for Microsoft 365 plans without its AI assistant, Copilot.
- The regulator claims Microsoft told customers they must either pay higher prices for AI-enabled plans or cancel their subscriptions, while concealing the option to stay on older, cheaper plans.
- ACCC Chair Gina Cass-Gottlieb said Microsoft’s conduct was “very serious” and intended to increase AI adoption and revenue, adding that the watchdog will seek a significant penalty.
- Microsoft says it is reviewing the allegations and remains committed to transparency and consumer trust, as the case becomes a major test of how consumer law applies to AI-integrated services.
Australia’s competition regulator has launched legal action against Microsoft, accusing the tech giant of misleading around 2.7 million Australians by obscuring cheaper subscription options for its Microsoft 365 software, following the integration of its artificial intelligence assistant, Copilot.
The Australian Competition and Consumer Commission (ACCC) alleges that since late last year, Microsoft informed subscribers they would need to pay higher prices to keep their Office software subscriptions — now bundled with Copilot — or cancel their plans entirely. The regulator claims the company failed to disclose a third option: retaining existing plans without Copilot at lower, unchanged prices.
ACCC Chair Gina Cass-Gottlieb said the watchdog’s investigation found that Microsoft “deliberately hid” a cheaper option to push adoption of its AI services and boost revenue. She described it as “very serious conduct affecting a significant number of Australian consumers,” adding that the regulator will seek a substantial penalty to show that breaching consumer law “is not just a cost of doing business.”
Microsoft said in a statement it is reviewing the ACCC’s claims and remains committed to “consumer trust and transparency,” adding it will work constructively with the regulator to ensure compliance with legal and ethical standards.
The proceedings follow widespread user backlash earlier this year, when Microsoft raised prices on its Microsoft 365 personal and family plans by up to 45%, citing the inclusion of new AI-driven features.
It Hasn’t Been a Smooth Year for Microsoft on The AI Front
The Australian Competition and Consumer Commission’s (ACCC) new lawsuit, accusing Microsoft of misleading 2.7 million customers about Microsoft 365 subscription price hikes tied to its AI assistant Copilot, comes just weeks after a separate U.S. class-action suit alleged that the tech giant used its exclusive partnership with OpenAI to inflate AI prices and stifle competition.
Both cases focus on similar concerns, claiming that Microsoft’s integration of AI tools has led to higher costs and fewer choices for consumers.
The Australian case centers on transparency around subscriptions and pricing, while the U.S. lawsuit challenges Microsoft’s broader influence over the AI market and its potential to limit competition.
Together, the two cases highlight growing global scrutiny of how major technology companies are embedding AI across their products.
Regulators in regions including Europe and the United States are already investigating whether companies such as Microsoft, Google and Amazon are using their dominance in AI to strengthen their market positions and disadvantage smaller rivals.
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