Microsoft is in trouble again, and this time, it involves the Australian watchdog and an expensive lawsuit. The Australian Competition and Consumer Commission (ACCC) has launched a major lawsuit against Microsoft, alleging that the tech giant misled approximately 2.7 million Australian customers into purchasing more expensive Microsoft 365 subscription plans that bundled its artificial intelligence assistant, Copilot.
The ACCC filed the legal action against Microsoft Australia Pty Ltd and its US parent company, Microsoft Corp, accusing them of breaching Australian consumer law by failing to clearly disclose a cheaper, ‘classic’ version of the product without the AI features.
The American software giant has been pushing its Copilot AI assistant across all its products in a bid to get more people on board the AI hype train and push the product to consumers. Copilot is based on OpenAI’s GPT models and promises to ease complex workflows.
Australia watchdog alleges Microsoft of misleading pricing
In the lawsuit, the regulator claims that starting October 2024, Microsoft’s marketing and user interface implied that consumers were required to upgrade to the new and pricier personal and family subscription tiers, featuring the GPT-powered Copilot.
Following the integration of the AI assistant, the annual price of the Microsoft 365 Personal plan rose by 45 per cent to A$159 (approximately $103), while the Family plan saw a 29 per cent increase to A$179 (approximately $117).
The ACCC alleges that Microsoft concealed the continued availability of the lower-cost, non-AI “classic” subscription. According to the regulator, consumers were only made aware of this cheaper alternative after they initiated the process to cancel their subscription.
“The omission of such material information and the presentation of limited choices created a false impression about available options,” an ACCC spokesperson stated. The watchdog states that this conduct exploited the lack of clear disclosure to steer users toward the more profitable, AI-integrated plans.
What could Microsoft have to pay
The ACCC is seeking substantial financial penalties, consumer redress for the overcharged customers, injunctions against future misleading conduct, and legal costs.
Under Australian consumer law, companies found guilty of misleading conduct can face maximum fines up to the greater of A$50 million, three times the benefit obtained from the breach, or 30 per cent of the company’s adjusted turnover during the period of the alleged violation.
Microsoft is yet to issue a public statement regarding the proceedings, which will now move through the Australian courts.
