TLDR: Australia’s competition regulator, the ACCC, has filed a lawsuit against Microsoft, accusing the tech giant of misleading 2.7 million customers into purchasing more expensive Microsoft 365 plans bundled with its AI assistant, Copilot. The ACCC alleges Microsoft failed to clearly disclose a cheaper ‘classic’ subscription option without the AI features, leading to significant price hikes for consumers.
The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings against Microsoft, alleging the company engaged in misleading conduct by prompting approximately 2.7 million Australian customers to upgrade to pricier Microsoft 365 subscription plans that included its artificial intelligence assistant, Copilot. The lawsuit, filed on Monday, October 27, 2025, claims that Microsoft did not adequately inform consumers that a lower-cost ‘classic’ version of Microsoft 365, without the integrated AI features, remained available.
According to the ACCC, the alleged misleading practices began in October 2024. Microsoft had increased the annual price of a personal Microsoft 365 license from $109 to $159, representing an approximate 45% jump. Similarly, a family subscription saw an increase from $139 to $179 per year, a rise of about 30%. Monthly personal subscriptions also increased from $11 to $16. Microsoft justified these price adjustments by citing the inclusion of new AI functionalities, such as Copilot and the Designer image generator.
However, consumer outrage surfaced on online forums and platforms like Reddit, where users shared experiences of being automatically upgraded to the more expensive plans. Many customers reported discovering a ‘workaround’ by attempting to cancel their subscriptions, which then presented them with the option to revert to a ‘Classic’ plan at the original, lower price. Critics accused Microsoft of ‘burying and hiding’ this cheaper alternative, with one user on Reddit stating, ‘It SHOULD have been mentioned in the email. Their AI crap really should be opt-in, instead of opt-out.’ Another user reportedly called the practice a ‘f***ing scam.’
In response to earlier criticisms, a Microsoft spokesperson stated that ‘Existing subscribers with recurring billing enabled can switch to plans without Copilot or AI credits like our Microsoft 365 Basic plan or, for a limited time, to Microsoft 365 Personal Classic or Microsoft 365 Family Classic plans.’ The company also affirmed its commitment to adhering to the laws and regulations of every country. The ACCC’s inquiry was reportedly prompted by tip-offs from online communities and an ABC News report earlier in the year.
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The ACCC’s lawsuit seeks various remedies, including financial penalties, injunctions, and consumer redress for the affected customers, in addition to legal costs. The specific amount of any penalty will be determined by the Court. The legal action specifically targets consumer Microsoft 365 Personal and Family bundles, excluding business and enterprise plans.
