Microsoft Faces ACCC Lawsuit Over Misleading Microsoft 365 Price Hikes in Australia

Microsoft has found itself in hot water in Australia. As reported by ABC News, the Australian Competition and Consumer Commission (ACCC) has sued Microsoft for allegedly misleading about 2.7 million Australians over Microsoft 365 subscription options and price increases tied to its AI assistant, Copilot.

The ACCC filed proceedings in the Federal Court against Microsoft Australia and its parent company. The lawsuit alleges that since late 2024, Microsoft told customers they must either accept a higher-priced Copilot-integrated plan or cancel their subscriptions.

The watchdog says Microsoft “deliberately hid” a cheaper alternative, the “classic” plan, which allowed users to retain their existing features without Copilot at the previous lower price. ACCC chair Gina Cass-Gottlieb, said:

Following a detailed investigation, the ACCC alleges that Microsoft deliberately hid this third option, to retain the old plan at the old price, in order to increase the uptake of Copilot and the increased revenue from the Copilot integrated plans.

She called the alleged conduct “very serious” and said the regulator would seek a significant penalty, adding that the case affects “a very significant number of Australian consumers.” She believes this should send a message that breaching consumer law “is not just a cost of doing business.”

Microsoft responded, saying it was reviewing the claim and remains “committed to working constructively with the regulator.” A company spokesperson added, “Consumer trust and transparency are top priorities for Microsoft… we remain committed to ensuring our practices meet all legal and ethical standards.”

The ACCC further alleges the company’s two emails and a blog post falsely implied that customers had no option other than upgrading or cancelling. The annual Microsoft 365 Personal plan price jumped 45% (from $109 to $159), while the Family plan saw a 29% hike (from $139 to $179) following Copilot’s integration.

With the lawsuit, the ACCC is seeking penalties, injunctions, consumer redress, and costs, saying millions may have suffered economic harm through unwanted automatic renewals at higher prices.