Microsoft Sued for Allegedly Misleading Millions to Subscribe for Microsoft 365 Subscriptions

Australia’s competition regulator has filed legal proceedings against Microsoft for allegedly misleading approximately 2.7 million Australian consumers regarding subscription options and pricing for Microsoft 365 plans.

The Australian Competition and Consumer Commission claims that Microsoft deliberately concealed the availability of cheaper alternative plans when integrating its AI assistant Copilot into subscription offerings.

The core of the ACCC’s complaint centers on what regulators describe as deceptive communication practices following Microsoft’s decision to bundle Copilot with Microsoft 365 subscriptions starting October 31, 2024.

Microsoft Sued for Microsoft 365 Subscriptions

According to the ACCC, Microsoft informed subscribers that they must either accept Copilot integration with significantly higher prices or cancel their subscriptions entirely.

What Microsoft allegedly failed to mention was the existence of Microsoft 365 Personal and Family Classic plans, which allowed customers to retain their existing features without Copilot at the original lower price point. The Classic plans remained virtually invisible to subscribers.

They were only revealed deep within the subscription cancellation process, accessible only after users navigated to their Microsoft account subscriptions section and selected the cancel option.

This hidden placement meant most consumers never discovered the alternative existed. The price increases accompanying Copilot integration were substantial.

Microsoft 365 Personal subscriptions rose 45 percent annually from $109 to $159, while Family plans increased 29 percent from $139 to $179. These increases prompted consumer complaints that ultimately triggered the ACCC investigation.

Microsoft’s communication strategy relied on three key pieces: two emails sent to auto-renewing subscribers and a blog post.

These messages conveyed that consumers faced a binary choice between accepting the expensive Copilot-integrated plans or cancelling entirely. The ACCC alleges this information was deliberately false and misleading by omission.

“Following a detailed investigation, 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 to increase the number of consumers on more expensive Copilot-integrated plans,” according to regulatory statements.

The regulator contends that many consumers would have selected the Classic plan had they known it existed, resulting in economic harm through unwanted price increases on renewed subscriptions.

The ACCC is seeking consumer redress for affected subscribers along with penalties, injunctions, and declarations against both Microsoft Pty Ltd and Microsoft Corporation.

For corporations breaching Australian Consumer Law, penalties can reach the greater of $50 million, three times the benefits obtained, or 30 percent of adjusted turnover during the breach period.

The court will ultimately determine applicable penalties based on its findings. The case explicitly addresses only consumer-focused Microsoft 365 Personal and Family plans, excluding business and enterprise subscriptions.

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