Australian authorities sue Microsoft for hiding the existence of a cheaper 'AI-free plan' from approximately 2.7 million Microsoft 365 users
The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit in the Federal Court against Microsoft and its Australian subsidiary for allegedly misleading approximately 2.7 million Australian customers about subscription options and pricing changes when Microsoft integrated its AI assistant, Copilot, into its Microsoft 365 plans.
Microsoft in court for allegedly misleading millions of Australians over Microsoft 365 subscriptions | ACCC
We've begun proceedings in the Federal Court against Microsoft for allegedly misleading Australian customers when communicating subscription options and price increases, after it integrated its AI assistant, Copilot, into Microsoft 365 plans. https://t.co/PW5z8mgwJL pic.twitter.com/8cm5JbAewb
— ACCC (@acccgovau) October 26, 2025
Since the Copilot integration, the annual subscription price for the Microsoft 365 Personal plan in Australia has increased by 45%, and the annual subscription price for the Microsoft 365 Family plan has increased by 29%.
Furthermore, the ACCC alleges that Microsoft notified subscribers with auto-renewal enabled for Microsoft 365 Personal/Family that they had only two options: accept the Copilot integration and pay the higher price, or cancel.
However, there was a plan called 'Microsoft 365 Classic' that offered all the features of the existing plan at a lower price without including Copilot. Microsoft did not mention the existence of the 'Classic' plan in its notification to subscribers, and the only way subscribers could access it was by going to the subscription section of their Microsoft account and selecting 'Cancel Subscription' to begin the cancellation process. During this cancellation process, the option to switch to the Classic plan first appeared.
The ACCC said Microsoft 'deprived users of the opportunity to make an informed decision by not offering them the Classic plan option, which would have offered them the full functionality of their existing plan without Copilot at a lower price.' It also said many users would have chosen the Classic plan if they had been aware of all the options available.
ACCC Chair Gina Cass-Gottlieb alleges that Microsoft deliberately omitted mention of the Classic plan and concealed its existence until cancellations began in order to increase subscriptions to its more expensive Copilot integrated plan.
The ACCC sought court orders, including penalties, injunctions, declarations, consumer restitution, and costs. The maximum penalty for each breach against a company is the greater of $50 million, or three times the profits made, or, if the total profits cannot be determined, 30% of the company's turnover during the period of the breach.
Regarding this issue, a Microsoft spokesperson commented, 'We are reviewing the ACCC's allegations in detail and consumer trust and transparency are Microsoft's top priorities.'
While the lawsuit was filed in Australia, HackerNews reported that users in the United States were also forced to switch their Microsoft 365 Personal plans to the more expensive Copilot plan.
Similar cases have also been reported with Adobe's Creative Cloud.
Good.
— Peter Brent (@mumbletwits) October 27, 2025
Now, if @acccgovau could look at the outrageous dodgy @Adobe , who recently
1. More than doubled monthly fee for Creative Cloud
2. Hit me with a ~$650 fee when I hit 'cancel'
(3. I ended up avoiding that fee by subscribing to Acrobat Pro only.)
???? https://t.co/dniyaan0fp
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