Australia’s competition regulator has launched legal action against Microsoft, according to France 24.
It accused the global tech company of misleading millions of Australian consumers into paying extra for access to its AI tool, Copilot.
The Australian Competition and Consumer Commission (ACCC) announced on Monday that it has lodged proceedings in the Federal Court.
The proceedings contained accusations against both Microsoft Australia and its U.S. parent company, Microsoft Corporation.
The regulator alleges that Microsoft made “false or misleading” statements to about 2.7 million Australians who subscribed to Microsoft 365.
The service includes the company’s popular suite of online applications, such as Word, Excel, PowerPoint, and Outlook.
According to the ACCC, from October 2024, Microsoft promoted its Copilot-integrated subscriptions in a way that misled existing users.
The company allegedly gave subscribers the impression that they had to upgrade to a more expensive plan or cancel their accounts entirely.
The Hidden Option
However, the ACCC claims a third, cheaper option existed. Subscribers could continue using their existing “Classic” Microsoft 365 plans, without Copilot, at the original price.
This option was not clearly communicated. The watchdog says the alternative appeared only when users began the cancellation process, effectively hiding it from public view.
“Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process,” said ACCC Chair Gina Cass-Gottlieb.
“This approach misled consumers and pushed them toward more expensive plans.”
Microsoft 365
The ACCC highlighted how essential Microsoft 365 has become for many individuals, schools, and businesses.
For many Australians, the software is critical to their daily work, communication, and productivity.
“Given there are limited substitutes to Microsoft’s bundled productivity suite, cancellation is a decision many would not make lightly,” Cass-Gottlieb said.
The regulator argues that Microsoft took advantage of this dependency by framing the upgrade as a necessary choice rather than an optional one.
Cost Difference
The commission said that annual subscriptions for Microsoft 365 plans, including Copilot, were between 29% and 45% more expensive than standard plans without the AI feature.
The ACCC is seeking several remedies, including financial penalties, injunctions to prevent future misconduct, consumer redress, and reimbursement for legal costs.
If the Federal Court rules against Microsoft, the company could face penalties of up to A$50 million (US$30 million) for each breach of Australian consumer law.
Microsoft has not yet provided an official response to the allegations. According to AFP, the company did not immediately reply to requests for comment.
Scrutiny
Around the world, regulators are questioning whether customers are given fair and transparent choices when new AI features are introduced.
Legal experts believe this lawsuit could set an important precedent in Australia.
“As AI becomes embedded in common productivity software, companies must communicate clearly about pricing and product options,” said Dr. Laura Bennett, a technology law expert at the University of Sydney.
She added that the case may influence how tech companies approach AI integration in subscription-based models.
Global Oversight
In recent years, the ACCC and other global watchdogs have increased their oversight of large technology firms.
The ACCC has previously taken similar actions against companies such as Google and Meta over misleading conduct and transparency failures.
Analysts say the case highlights the delicate balance between innovation and consumer protection.
While AI tools like Copilot promise greater efficiency, they also introduce new challenges for regulators.
“AI can transform productivity, but it must be introduced with honesty and fairness,” Bennett noted.
“Consumers should never feel pressured into paying for technology they didn’t knowingly choose.”
Expectations
The Federal Court is expected to schedule its first hearing in the coming months.
If the ACCC succeeds, Microsoft may be ordered to compensate affected users and revise its marketing and billing practices in Australia.
Until then, the ACCC advises Microsoft 365 subscribers to review their accounts closely.
Users should confirm whether they are being charged for Copilot features they did not intend to purchase.
