The Australian Competition and Consumer Commission (ACCC), the nation’s competition watchdog, has taken legal action against Microsoft. The ACCC claims the company misled about 2.7 million Australian customers concerning their Microsoft 365 subscription options. The main accusation focuses on Microsoft’s alleged failure to inform customers about a cheaper, “classic” subscription tier that did not include the integrated Copilot artificial intelligence assistant, which was introduced alongside price increases.
The ACCC has filed the lawsuit in the Federal Court against both Microsoft Australia and Microsoft Corporation. The regulator argues that since late 2024, Microsoft has informed subscribers of certain Microsoft 365 personal and family plans, particularly those with automatic renewal, that they have to choose between accepting a higher-priced plan with the Copilot AI feature or canceling their subscription.
ACCC Chair Gina Cass-Gottlieb was critical of Microsoft’s actions. In a press conference, she described the behavior as “very serious” and pledged to seek a significant financial penalty. Ms. Cass-Gottlieb stressed that the regulator aims for a punishment that reinforces the idea that not following Australian Consumer Law is not just “a cost of doing business.”
The regulator’s thorough investigation found that Microsoft intentionally hid a third, important option from customers. This option would have allowed subscribers to keep their current plan features, without Copilot, and maintain their lower pricing. According to the ACCC Chair, this alleged concealment aimed to boost the uptake of Copilot and increase revenue from the integration plans.
The misleading communications allegedly began around October 31, 2024. The ACCC indicates that Microsoft’s messages to subscribers did not mention the availability of the cheaper “classic” plans. The only way subscribers could find this option was by starting the cancellation process. They had to go to their Microsoft account’s subscription area and select “cancel subscription.” Only on the next screen were customers given the choice to switch to the classic plan.
The Microsoft 365 apps, which include the familiar Microsoft Office suite, are considered essential tools for many Australians. Therefore, the ACCC expressed concern that the lack of clear information prevented customers from making fully informed decisions about their subscription options. “We’re concerned that Microsoft’s communications denied its customers the chance to make informed decisions about their subscription options,” Ms. Cass-Gottlieb noted. She added that many Microsoft 365 customers likely would have selected the classic plan if they had known about all the options available. Ms. Cass-Gottlieb also acknowledged the more than 100 Australian consumers who reported issues to the ACCC’s Infocentre about the pricing changes in late 2024 and early 2025.
Consumer advocacy groups have largely praised the ACCC’s strong response. Stephanie Tonkin, chief executive of the Consumer Action Law Centre, pointed out Microsoft’s significant market share and noted that many Australians may have been misled into choosing a more expensive subscription than they wanted or needed. Similarly, the Consumer Policy Research Centre, an independent think tank, urged companies to be held accountable for prioritizing tactics over trust and failing to treat customers with care and respect. The center highlighted broader industry problems, noting that 75 percent of Australians with subscriptions encounter difficulties when trying to cancel, with one in ten giving up and continuing to pay for unwanted services.
In response to the lawsuit, a Microsoft spokesperson told ABC News that the company is reviewing the ACCC’s claim and emphasized that “Consumer trust and transparency are top priorities for Microsoft.”
This legal action shows the ACCC’s strong commitment to enforcing consumer protection laws, especially against multinational companies operating in competitive digital markets where consumers may have few alternatives. The outcome of this case could set an important precedent regarding corporate transparency in subscription models in Australia.
