Australia’s Competition Regulator Sues Microsoft Over Alleged Subscription Misleading

Australia’s competition watchdog, the Australian Competition and Consumer Commission (ACCC), has launched legal proceedings against Microsoft, accusing the software giant of misleading approximately 2.7 million customers about cheaper subscription options when integrating its AI assistant, Copilot, into Microsoft 365 plans.

According to the ACCC, when Microsoft rolled out Copilot integration alongside significant price increases in personal and family Microsoft 365 plans on October 31 last year, subscribers were presented with only two choices: either accept the higher-priced Copilot plans or cancel their subscription altogether. However, the ACCC alleges Microsoft deliberately concealed the existence of a third, more affordable option known as the Microsoft 365 Personal and Family “Classic” plans.

The Classic plans, which retained all the original features without Copilot at previous lower prices, were reportedly only visible during the subscription cancellation process. Customers had to navigate to their account’s subscription section, select “Cancel subscription,” and proceed through multiple steps before reaching a page that revealed the Classic plan option. The ACCC claims this approach was intended to obscure the cheaper alternative and push consumers toward the pricier Copilot-integrated plans.

ACCC Chair Gina Cass-Gottlieb stated, “Following a detailed investigation, we will allege in Court that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans.”

The investigation was prompted by consumer complaints, discussions on Reddit, and tips submitted to the ACCC’s Infocentre that uncovered the hidden Classic option. The regulator is now seeking penalties, injunctions, declarations, consumer redress, and reimbursement of costs.

Industry experts weighed in on the case. Joni Pirovich, CEO and founder of Crystal aOS, remarked, “With this sort of behavior, Microsoft risks its social contract with users regardless of the legal outcome. An interesting avenue the ACCC could pursue in discovery is to ask for the reasons for Microsoft approving the rollout without disclosing the Classic option.”

Even Alex Chandra, a partner at IGNOS Law Alliance, told Decrypt, “Ideally, companies must present all material options prominently so consumers can make informed choices without hidden steps. Simply making an option technically available (e.g., buried in account settings or cancellation flows) is usually insufficient. Companies must educate users about their choices.”

Microsoft has not yet responded to requests for comment.

This lawsuit highlights the importance of transparency in subscription services and the regulatory scrutiny companies face when implementing significant changes that affect customers’ choices and costs.
https://decrypt.co/346035/microsoft-sued-australia-365-price-hikes-tied-ai-copilot-rollout