Australia Sues Microsoft Over Misleading Copilot AI Pricing Tactics

Australia Sues Microsoft Over ‘Misleading’ Copilot AI Pricing

Australia’s competition watchdog has filed a lawsuit against Microsoft, alleging the tech giant misled millions of Australians about their Microsoft 365 subscription options for its AI assistant, Copilot.

Key Takeaways

• Microsoft accused of hiding cheaper “Classic” plans from 2.7 million Australian subscribers.
• Customers were allegedly presented with only two choices: pay more for Copilot or cancel entirely.
• Potential penalties could exceed AU$50 million per breach.

Hidden Subscription Option Revealed

The Australian Competition and Consumer Commission (ACCC) claims Microsoft made “false or misleading” statements to auto-renewing Microsoft 365 subscribers. The company allegedly told customers they must either upgrade to more expensive Copilot-integrated plans or cancel their subscriptions completely.

However, the ACCC revealed a third option was concealed: subscribers could maintain their existing “Classic” plans without Copilot at the original price. This option only became visible when users began cancellation procedures.

“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,” said ACCC chair Gina Cass-Gottlieb.

Essential Services and Limited Choices

The commission emphasized that Microsoft Office applications are essential for many Australians, with limited alternatives available. This made cancellation a significant decision for subscribers.

“The Microsoft Office apps included in 365 subscriptions are essential in many people’s lives and given there are limited substitutes to the bundled package, cancelling the subscription is a decision many would not make lightly,” Cass-Gottlieb added.

Financial Impact and Legal Consequences

The alleged misconduct affects personal and family plan subscribers since October 31, 2024. Copilot-integrated plans cost between 29% and 45% more than standard plans.

The ACCC is seeking substantial penalties, injunctions, consumer compensation, and legal costs. Microsoft could face penalties of AU$50 million (approximately US$30 million) or more for each breach. The company has not yet responded to requests for comment.