Australia’s competition regulator, the Australian Competition and Consumer Commission (ACCC), has filed a lawsuit against Microsoft, accusing the company of deceiving customers after integrating its artificial intelligence tool, Copilot, into Microsoft 365 plans. The ACCC alleges that starting in October 2024, Microsoft led around 2.7 million consumers to believe they needed to switch to more expensive Personal and Family plans that featured Copilot, rather than remain on their existing subscriptions. These changes resulted in a significant price increase: the annual cost of the Personal plan rose by 45% to A$159, while the Family plan increased by 29% to A$179.

According to the regulator, Microsoft failed to properly inform users that they could continue with a cheaper “classic” version of the plan that did not include Copilot. The ACCC argues that this option was only revealed once customers initiated the cancellation process, a design that created a misleading impression of limited choices. The regulator claims this lack of transparency constitutes a breach of Australian consumer law because it withheld important information that could influence purchasing decisions.

The ACCC also states that Microsoft’s official customer communications, such as emails and a public blog post, only informed users that prices would go up at the next renewal period. These messages did not mention that a lower-priced alternative remained available. A Microsoft spokesperson said the company is currently reviewing the claims made by the regulator. The ACCC is seeking penalties, customer compensation, legal costs, and court orders. It said any penalty would ultimately be determined by the court.