Microsoft Faces Major Australian Lawsuit Over Alleged AI Plan Misrepresentation
The Australian Competition and Consumer Commission (ACCC) has filed a significant lawsuit against Microsoft, alleging the tech giant misled approximately 2.7 million Australian customers into buying more expensive Microsoft 365 subscriptions that bundled its AI assistant, Copilot.
Key Allegations
The ACCC claims Microsoft breached Australian consumer law by failing to clearly disclose a cheaper, ‘classic’ version of Microsoft 365 without AI features. Starting October 2024, Microsoft’s marketing allegedly implied consumers were required to upgrade to the new, pricier Personal and Family tiers featuring GPT-powered Copilot.
Following AI integration, the Microsoft 365 Personal plan saw a 45% price increase to A$159 annually, while the Family plan increased by 29% to A$179.
The regulator alleges Microsoft concealed the continued availability of the lower-cost, non-AI “classic” subscription, with consumers only discovering this cheaper alternative when they attempted 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.
Potential Penalties
The ACCC is seeking substantial financial penalties, consumer redress for overcharged customers, injunctions against future misleading conduct, and legal costs.
Under Australian consumer law, maximum penalties can reach the greater of A$50 million, three times the benefit obtained from the breach, or 30% of the company’s adjusted turnover during the violation period.
Microsoft has yet to issue a public statement regarding the proceedings, which will now proceed through the Australian courts.
