SYDNEY, Australia — Australia’s competition regulator filed a federal lawsuit against Microsoft on Monday (27 Octorber), accusing the tech giant of deliberately misleading millions of customers about pricing options for its AI-powered office software.
The Australian Competition and Consumer Commission (ACCC) alleged that Microsoft misled approximately 2.7 million subscribers to its Microsoft 365 service by presenting false choices about upgrading to plans that include the company’s Copilot artificial intelligence assistant.
According to the lawsuit filed in Federal Court against Microsoft Australia and its U.S. parent company Microsoft Corp., the software maker told customers they faced only two options: pay significantly more for Copilot-integrated services or cancel their subscriptions entirely.
However, regulators say Microsoft concealed a third option that allowed customers to maintain their existing “Classic” plans without Copilot at their original price. This alternative only became visible when customers began the cancellation process.
“Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans,” ACCC Chair Gina Cass-Gottlieb said in a statement.
Cass-Gottlieb emphasized the significance of Microsoft’s office applications in daily life, noting that “given there are limited substitutes to the bundled package, cancelling the subscription is a decision many would not make lightly.”
The commission said the alleged misleading conduct affected personal and family plan subscribers beginning 31 October. Annual subscriptions for Microsoft 365 plans incorporating Copilot cost between 29% and 45% more than comparable plans without the AI features.
The ACCC is seeking substantial penalties, injunctions, consumer compensation, and legal costs from Microsoft. Under Australian consumer law, the company could face fines of AU$50 million (approximately R518 million) or more for each alleged breach.
Microsoft did not immediately respond to requests for comment regarding the lawsuit.
The case highlights growing regulatory scrutiny of how technology companies market AI-enhanced services and communicate pricing changes to existing customers. Australia has emerged as an increasingly active enforcer of consumer protection laws against major tech platforms.
