ACCC sues Microsoft Australia over allegations it misled 2.7 million Microsoft 365 subscribers over prices

Australia’s consumer watchdog is suing Microsoft over allegations it misled 2.7 million Aussies over prices for its Microsoft 365 subscriptions.

The ACCC has commenced proceedings in the Federal Court, alleging that since October 2024, Microsoft Australia has misled 365 personal and family plan subscribers who may have suffered “economic harm”.

The case is centred on the tech giant’s communications with those subscribers with auto-renewal.

It is alleged that in two emails and a blog post it informed them that they had to either accept the integration of its AI assistant Copilot — and pay more for the plan — or cancel their subscription.

The ACCC says this was misleading because a third option was not disclosed to Microsoft’s customers, the ability to retain Microsoft 365, without Copilot, at the previous lower price via their ‘classic’ plan.

ACCC Chair Gina Cass-Gottlieb said it would be alleged that Microsoft “deliberately hid this third option to retain the old plan at the old price in order to increase the uptake of Copilot and the increased revenue from that Copilot-integrated plans.”

After the introduction of Copilot, the annual subscription price of the Microsoft 365 Personal plan increased by 45 per cent from $109 to $159. The annual subscription price for the Microsoft 365 Family plan increased by 29 per cent from $139 to $179.

“The ACCC does not take issue with the offering of new services or a different plan or, actually, an increase in price. Microsoft and businesses are free to change the services that they offer and also to choose, as they see fit, how to price for them.

“We have taken these proceedings today because we allege millions of Australian consumers were deprived of the opportunity to make an informed choice about the subscription options available to them.”

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

“We believe many Microsoft 365 customers would have opted for the Classic plan had they been aware of all the available options.”

The ACCC launched its investigation after online forums such as Reddit and its own Infocentre were flooded with complaints about the tech company’s price move after the introduction of Copilot.

The ACCC is now seeking orders including penalties, injunctions, declarations, consumer redress, and costs.

A spokesperson for Microsoft said consumer trust and transparency were top priorities for the company.

“We are reviewing the ACCC’s claim in detail. We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards.”