Microsoft faces Australian lawsuit over hidden AI subscription option
Australia’s competition watchdog alleges that Microsoft misled around 2.7 million subscribers by bundling its AI assistant and hiking prices without clearly revealing cheaper alternatives.
In a legal move that underscores growing scrutiny of digital platforms, the Australian Competition and Consumer Commission (ACCC) has filed a lawsuit in the Federal Court against Microsoft Corporation, accusing the company of misleading approximately 2.7 million Australian personal and family-plan subscribers of its Microsoft 365 service after integrating its AI assistant Copilot.
According to the ACCC, Microsoft raised subscription prices by 45 % for the Personal plan and 29 % for the Family plan after bundling Copilot starting 31 October 2024.
The regulator says Microsoft told consumers their only options were to pay the higher price with AI or cancel their subscription, while failing to clearly disclose a cheaper ‘Classic’ version of the plan without Copilot that remained available.
The ACCC argues Microsoft’s communications omitted the existence of that lower-priced plan unless consumers initiated the cancellation process. Chair Gina Cass-Gottlieb described this omission as ‘very serious conduct’ that deprived customers of informed choice.
The regulator is seeking penalties, consumer redress, injunctions and costs, with potential sanctions of AUS $50 million (or more) per breach.
This action signals a broader regulatory push into how major technology firms bundle AI features, raise prices and present options to consumers, an issue that ties into digital economy governance, consumer trust and platform accountability.
Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!
