Australia Sues Microsoft Over Misleading AI-Linked Price Hikes For 365 Subscriptions

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(RTTNews) - Australia's competition regulator has filed a lawsuit against Microsoft (MSFT), alleging the tech giant misled around 2.7 million customers into paying higher subscription fees for Microsoft 365 after integrating its Copilot AI tool.

According to the Australian Competition and Consumer Commission or ACCC, Microsoft implied that users had to upgrade to new, more expensive Personal and Family plans bundled with Copilot, while failing to clearly disclose that cheaper "classic" plans without the AI feature were still available.

Following the integration, subscription prices rose sharply; the Personal plan increased 45 percent to A$159 ($103) and the Family plan by 29 percent to A$179, the ACCC said. Customers reportedly only discovered the lower-cost option after initiating the cancellation process, which the regulator argued was deceptive and in violation of Australian consumer law.

Microsoft's communications, including customer emails and blog posts, omitted mention of the cheaper plan and simply stated that the price increases would take effect at the next renewal.

A Microsoft spokesperson said the company is reviewing the complaint in detail. The ACCC is seeking penalties, redress, injunctions, and costs from Microsoft Australia and its U.S. parent.

Under Australian law, penalties can reach A$50 million per breach, or up to 30% of a company's adjusted turnover if the benefit cannot be calculated. The final penalty will be determined by the court.

Monday, MSFT closed at $531.52, up 1.51%, and currently trades after hours at $533.09, up 0.30% on the NasdaqGS.