The Australian Competition and Consumer Commission (ACCC) has launched proceedings in the Federal Court against Microsoft Australia Pty Ltd and its US parent company, Microsoft Corporation, alleging that the technology giant misled millions of Australian consumers regarding Microsoft 365 subscription options and price increases following the integration of its AI assistant, Copilot.
According to the ACCC, approximately 2.7 million Australian customers with auto-renewing Microsoft 365 Personal and Family subscriptions were told they had to accept the Copilot integration and pay higher renewal prices or cancel their subscriptions. However, the regulator alleges that Microsoft failed to disclose a third option — the Microsoft 365 Personal or Family “Classic” plans — which allowed users to retain their existing features at the original, lower price and without Copilot.
Omission of the “Classic” Option
The ACCC claims that Microsoft’s communications — including two customer emails and a company blog post published between October 2024 and April 2025 — were false or misleading because they suggested consumers had only two choices: accept the price increase or cancel.
In reality, the ACCC alleges, the “Classic” plans were hidden from view and only appeared when subscribers began the process of cancelling their subscription. Consumers could access the option only after navigating to the subscription management section of their Microsoft account and selecting “Cancel subscription,” at which point the Classic plan was offered as an alternative to cancellation.
“We will allege in Court that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process,” said ACCC Chair Gina Cass-Gottlieb.
“Given the importance of Microsoft 365 applications in many people’s daily lives, cancelling their subscription is a decision few would make lightly. We’re concerned that Microsoft’s conduct denied consumers the opportunity to make informed decisions about their subscription options.”
Significant Price Increases
Following the Copilot integration, Microsoft’s subscription prices rose sharply, with the Microsoft 365 Personal plan increasing by 45 per cent from AUD 109 to AUD 159 per year, and the Microsoft 365 Family plan increasing by 29 per cent from AUD 139 to AUD 179 per year. The ACCC believes many subscribers would have chosen to remain on the Classic plan, without AI features, had they been aware of its existence.
Consumer Impact and ACCC Action
The regulator alleges that millions of Australians may have suffered economic harm through automatic renewal at the higher Copilot-integrated prices. The ACCC is seeking penalties, injunctions, declarations, consumer redress, and costs, and says consumer complaints and online discussions — including on Reddit — were instrumental in uncovering the issue.
The ACCC’s case focuses on Microsoft 365 Personal and Family plans supplied for home use, excluding business and enterprise subscriptions.
Background and Context
Microsoft launched Copilot, its generative AI assistant, in 2023. The tool was integrated into Microsoft 365 Personal and Family plans in Australia on 31 October 2024 and rolled out globally in early 2025.
The ACCC alleges that Microsoft Corporation, as the global publisher of the relevant communications, prepared and disseminated the misleading materials, and that Microsoft Australia adopted them as the local seller of the subscriptions.
The regulator’s enforcement action forms part of its broader focus on digital markets and consumer protection in the online economy, which remains an ongoing compliance and enforcement priority.
Potential Penalties
If the Court finds that Microsoft breached the Australian Consumer Law, the company could face maximum penalties per contravention of the greater of AUD 50 million, three times the total benefit obtained, or 30 per cent of adjusted turnover during the relevant period if the benefits cannot be quantified.
The ACCC has not commented on potential penalty amounts, noting that this will be a matter for the Court’s determination.
Consumer Guidance
The ACCC advises that Microsoft 365 Personal and Family subscribers who have not yet renewed their subscription since 8 July 2025 may still be able to switch to the Classic plan by selecting “Cancel subscription” and following the steps until the Classic option appears. However, subscription terms and availability remain subject to Microsoft’s discretion and may change at any time.
