- ACCC takes Microsoft to Federal Court over alleged misleading conduct tied to Copilot pricing in Microsoft 365.
- About 2.7 million Personal and Family subscribers were told to accept higher prices or cancel, while a cheaper "Classic" plan was only shown during cancellation.
- Annual prices rose to A$159 (Personal, +45%) and A$179 (Family, +29%) after Copilot integration.
- Regulator seeks penalties up to A$50 million per breach or 30% of adjusted turnover, plus refunds and injunctions; Microsoft says it is reviewing the claims.
Australia’s competition watchdog has taken Microsoft to court, alleging that changes tied to the company’s AI assistant Copilot led to confusing and costly renewals for Microsoft 365 subscribers. The case, brought by the Australian Competition and Consumer Commission (ACCC), centers on whether millions of users were given clear, upfront choices about paying more or keeping their existing plans.
According to the regulator, around 2.7 million Australian customers on Personal and Family subscriptions were told they faced two options at renewal: accept higher prices with Copilot bundled in, or cancel. A cheaper “Classic” alternative that preserved prior features and pricing was, the ACCC says, surfaced only after users began the cancellation flow—an approach the watchdog views as misleading under Australian Consumer Law.
The case at a glance
The lawsuit has been filed in the Federal Court of Australia against Microsoft Australia Pty Ltd and its U.S. parent, Microsoft Corp. The ACCC is seeking civil penalties, consumer redress, injunctions and legal costs, arguing that Microsoft’s communications failed to adequately disclose a material option that would have avoided the price rise.
If the court finds breaches, potential penalties could be substantial: the maximum per contravention is the greater of A$50 million (roughly US$32–33 million), three times any reasonably attributable benefit, or 30% of adjusted turnover during the period of the conduct when that benefit cannot be determined.
How the upgrade was presented
The ACCC says that from 31 October 2024, auto-renewing Microsoft 365 Personal and Family users were notified that Copilot would be integrated and that prices would increase at the next renewal. Communications—two emails and a company blog post—framed the choice as adopting the new pricing with Copilot or cancelling outright, with no mention of the “Classic” plan at that stage.
The regulator alleges the option to keep the cheaper “Classic” tier only appeared after customers initiated cancellation, a design that created a false impression of available choices. This approach echoes what critics call “dark patterns,” where interface design nudges users toward a more expensive outcome by obscuring alternatives.
What changed for customers
With Copilot bundled into Microsoft 365, the ACCC says the annual price for the Personal plan jumped by 45% to A$159, while the Family plan rose 29% to A$179. Customers who were not clearly informed about declining Copilot or staying on “Classic” could have felt compelled to accept the increase at renewal.
Microsoft’s Copilot—introduced broadly across Word, Excel and PowerPoint from late 2024—is marketed as a generative assistant to draft, summarize and analyze content. The ACCC argues that the everyday importance of Microsoft 365 to households and businesses magnified the impact of any omissions about cheaper options.
The ACCC’s argument
ACCC Chair Gina Cass-Gottlieb contends that Microsoft deliberately left out references to the “Classic” plan in customer communications. The regulator will argue the company only revealed that option to those who had already started cancelling, which, if proven, would be a deliberate omission intended to push users onto pricier Copilot-inclusive plans.
The watchdog further maintains that the emails and blog post about the new prices and Copilot integration were misleading due to what they left out, not just what they said. By failing to disclose a material, cheaper choice at the decision point, the ACCC claims users were given an incomplete picture.
Microsoft’s response
Microsoft says it is reviewing the allegations in detail and emphasized that consumer trust and transparency are core priorities. The company stated it remains committed to working constructively with the ACCC and ensuring its practices comply with all applicable legal and ethical standards.
Beyond the immediate dispute, Microsoft will likely focus on clarifying how customers can retain existing plans without Copilot if they wish, and whether any changes to renewal messaging are needed to avoid confusion going forward.
What happens next
The court will ultimately determine whether Microsoft breached the law and, if so, what penalties or remedies apply. The ACCC noted it would not speculate on penalty sizes; any orders could include refunds, injunctions and corrective communications to consumers affected by the alleged conduct.
Regulators globally are scrutinizing upsell flows and interface design, and Australia’s case could become a potential precedent for how companies disclose AI add-ons and price changes. Similar debates in other jurisdictions have focused on discouraging “dark patterns” that limit user autonomy or obscure cheaper options.
The proceeding tests whether Microsoft adequately disclosed the ability to remain on lower-cost “Classic” plans without Copilot. With millions of subscribers, material price rises of A$159 (Personal) and A$179 (Family), and the prospect of hefty penalties, the outcome will shape how transparently tech firms communicate major feature bundles and their pricing.
