ACCC Takes Microsoft to Court Over Alleged AI-Linked Price Hikes in Australia
Regulator accuses Microsoft of misleading 2.7 million Australians by concealing cheaper non-AI subscription option when bundling Copilot into Microsoft 365
Australia’s competition regulator has filed landmark proceedings in the Federal Court against Microsoft Corporation and its Australian affiliate, alleging the company misled approximately 2.7 million consumers when it raised prices on its Microsoft 365 Personal and Family subscriptions following the integration of its AI assistant, Copilot.
According to the Australian Competition and Consumer Commission (ACCC), as of October 31 2024 Microsoft informed subscribers they would need to accept the Copilot-enhanced version of Microsoft 365 — at a higher annual price — or cancel.
However, the regulator contends a third “Classic” option remained available at a lower price without Copilot, an option that the company allegedly did not disclose in its communications.
The ACCC has alleged that Microsoft’s emails and blog post stated only two choices — upgrade and pay more, or cancel — and omitted any mention of the Classic plan.
Customers reportedly had to initiate the cancellation process before the alternative plan was revealed.
The regulator argues this omission deprived consumers of a fair, informed decision and thus breached the Australian Consumer Law.
Under the terms outlined by the ACCC, the Personal plan’s annual price rose by 45 per cent — from 109 Australian dollars to 159 Australian dollars — while the Family plan increased by 29 per cent — from 139 to 179 Australian dollars.
Microsoft has responded by saying the company is reviewing the ACCC’s claims in detail and remains committed to compliance and consumer trust.
It has not admitted any wrongdoing.
The ACCC is seeking penalties, judicial injunctions, redress for affected consumers and legal costs.
Maximum penalties under law could exceed 50 million Australian dollars or a percentage of the company’s turnover.
Industry observers say the case signals a growing regulatory focus on how major technology firms bundle AI into subscription products and how those changes are communicated to users.
For Microsoft this may become a test case of how global AI-driven monetisation strategies are handled under national consumer-protection regimes.
As the matter proceeds through the Federal Court, the outcome could have wider implications for other providers employing AI enhancements and pricing shifts.
According to the Australian Competition and Consumer Commission (ACCC), as of October 31 2024 Microsoft informed subscribers they would need to accept the Copilot-enhanced version of Microsoft 365 — at a higher annual price — or cancel.
However, the regulator contends a third “Classic” option remained available at a lower price without Copilot, an option that the company allegedly did not disclose in its communications.
The ACCC has alleged that Microsoft’s emails and blog post stated only two choices — upgrade and pay more, or cancel — and omitted any mention of the Classic plan.
Customers reportedly had to initiate the cancellation process before the alternative plan was revealed.
The regulator argues this omission deprived consumers of a fair, informed decision and thus breached the Australian Consumer Law.
Under the terms outlined by the ACCC, the Personal plan’s annual price rose by 45 per cent — from 109 Australian dollars to 159 Australian dollars — while the Family plan increased by 29 per cent — from 139 to 179 Australian dollars.
Microsoft has responded by saying the company is reviewing the ACCC’s claims in detail and remains committed to compliance and consumer trust.
It has not admitted any wrongdoing.
The ACCC is seeking penalties, judicial injunctions, redress for affected consumers and legal costs.
Maximum penalties under law could exceed 50 million Australian dollars or a percentage of the company’s turnover.
Industry observers say the case signals a growing regulatory focus on how major technology firms bundle AI into subscription products and how those changes are communicated to users.
For Microsoft this may become a test case of how global AI-driven monetisation strategies are handled under national consumer-protection regimes.
As the matter proceeds through the Federal Court, the outcome could have wider implications for other providers employing AI enhancements and pricing shifts.
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