The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings against Microsoft, alleging the tech giant misled approximately 2.7 million Australian personal and family plan subscribers when it introduced its AI-powered Copilot into Microsoft 365 subscriptions.
The regulator claims that from 31 October 2024, Microsoft communicated a price increase of up to 45% for its Office suite, presenting customers with only two options: accept the higher price with the added AI features, or cancel their subscription. The ACCC alleges that Microsoft failed to disclose a third option – a 'classic' plan that retained existing features without Copilot at the previous lower price.
According to the ACCC, the annual subscription for a Microsoft 365 personal plan rose from $109 to $159 (a 45% increase), while the family plan increased from $139 to $179 (a 29% increase). Consumers were only informed about the classic plan after initiating the cancellation process.
The ACCC chair, Gina Cass-Gottlieb, stated, 'We allege that Microsoft’s communications were false or misleading, deliberately omitting reference to the classic plans to drive more consumers onto the more expensive Copilot-integrated plans.' She noted that office apps are essential and cancelling may not have been a viable alternative for many.
The watchdog is seeking penalties, injunctions, and consumer redress, with maximum fines potentially reaching $50 million or more. A Microsoft spokesperson said, 'Consumer trust and transparency are top priorities for Microsoft, and we are reviewing the ACCC’s claim in detail.'
