The Australian Competition and Consumer Commission (ACCC) has initiated a legal case against Microsoft Australia and its parent company, Microsoft Corporation, for allegedly misleading approximately 2.7 million Australian consumers regarding Microsoft 365 subscription services. The court proceedings are focused on claims that Microsoft misrepresented subscription options and failed to adequately disclose price increases following the introduction of its AI assistant, Copilot, into Microsoft 365 plans.
The ACCC asserts that starting from late last year, Microsoft informed subscribers of certain Microsoft 365 plans that they needed to accept a higher price to keep their subscriptions, now inclusive of Copilot, or otherwise they would have to cancel their memberships. According to the regulator, Microsoft did not mention that subscribers could retain their existing plans—without Copilot and at lower prices.
A Microsoft spokesperson stated that the company is currently reviewing the ACCC’s claims and emphasized that consumer trust and transparency remain core priorities for Microsoft. The spokesperson reaffirmed the company’s commitment to collaborating with the regulator to meet legal and ethical standards.
The controversy began earlier this year when Microsoft raised its subscription costs for Microsoft 365 in Australia. Customers quickly took to online platforms to voice their discontent with the price hikes. Allegations from the ACCC suggest that since October 31, 2024, Microsoft informed subscribers of personal and family plans with auto-renewal that they must switch to the higher-priced plans or cancel their subscriptions entirely. The issue revolves around insufficient communication regarding the availability of lower-cost “classic” plans—options that subscribers could only access by initiating a cancellation process.
The ACCC’s investigation indicates that the process for switching to these classic plans required customers to go through the cancellation prompts on their Microsoft account, where they would only discover the alternative plans after initiating the cancellation. Gina Cass-Gottlieb, the ACCC chair, remarked that the absence of reference to the classic plans in Microsoft’s communications was a deliberate act designed to increase enrollment in the higher-priced Copilot-integrated subscriptions. She expressed concern that the misleading communications prevented consumers from making informed decisions regarding their options.
Given the essential nature of the Microsoft Office apps included in the 365 subscriptions, the ACCC highlighted that many individuals may hesitate to cancel their subscriptions altogether. The regulator believes that numerous customers would have opted for the classic plans had they been adequately informed about their availability.
The ACCC plans to seek judicial orders including penalties, injunctions, declarations, and consumer redress on behalf of those affected by Microsoft’s alleged misleading practices. The regulator argues that the automatic renewal of subscriptions at increased prices may have resulted in economic harm for many Australians.
The price changes have been significant, with the annual subscription for the Microsoft 365 personal plan increasing by 45 percent—from $109 to $159—while the family plan saw a 29 percent rise from $139 to $179. Microsoft had attempted to notify auto-renewing subscribers through two emails and a blog post regarding the Copilot integration and subsequent price adjustments, but the ACCC contends that these communications misrepresented the options available to consumers.
The watchdog’s investigation gathered valuable insights from consumer reports and discussions within online forums, which played a critical role in bringing the alleged misleading conduct to light. Consumers who are Microsoft 365 subscribers and have not renewed their subscriptions since July 8, 2025, may potentially revert to their previous plans by navigating through the cancellation process.
The ACCC cautioned that the subscription options and prices remain fully under Microsoft’s control and could change at any given moment, emphasizing the need for accuracy in business communications to comply with Australian consumer law.
