ACCC Sues Microsoft for Misleading Customers
The Australian Competition and Consumer Commission (ACCC) has initiated a lawsuit against Microsoft, claiming the tech company misled customers into paying higher fees by bundling its AI tool, Copilot, with Microsoft 365 software.
According to the ACCC, around 2.7 million customers were misled into thinking they needed to upgrade to pricier personal or family Microsoft 365 plans that included the AI-powered Copilot tool. The lawsuit, filed on Monday, alleges that Microsoft’s actions violate Australian consumer law.
After incorporating the Copilot tool in October 2024, Microsoft reportedly increased the price of its individual plans by 45%, raising it to A$159 (about $103.32), while family plans saw a 29% jump to A$179 (approximately $117.19). The ACCC contends that Microsoft did not adequately inform users about the availability of a cheaper “classic” plan without Copilot.
The regulator claims that this more affordable option was mentioned only when consumers began the cancellation process. It argues that Microsoft’s approach misleads customers by failing to provide essential information about their choices. Furthermore, the ACCC points out that previous communications from Microsoft—including emails and blog posts—did not mention these cheaper alternatives and only indicated that prices would rise at the next automatic renewal.
In light of these accusations, the ACCC is seeking penalties, consumer compensation, injunctions, and costs against both Microsoft Australia Pty Ltd and its parent company in the United States. The maximum fine for breaching Australian consumer law can reach A$50 million, capped at three times the profit attributed to the breach or, if profits can’t be determined, 30% of the company’s turnover during that period, whichever is higher. The final penalty will depend on the court’s ruling.
In response, a Microsoft spokesperson stated that the company is reviewing the ACCC’s allegations thoroughly but has not provided additional comments at this time.
