ACCC Sues Microsoft in Australia Over Copilot Change and 2.7 Million Subscriptions

Australia’s competition regulator has taken Microsoft to the Federal Court, alleging the company misled about 2.7 million Australian Microsoft 365 subscribers by presenting them with a binary “accept the Copilot-integrated plan at a higher price or cancel” choice while failing to clearly disclose a contemporaneous lower-cost Microsoft 365 Classic option that preserved prior features and pricing.

Background / Overview​

Microsoft began rolling its consumer-facing generative AI assistant, Copilot, into Microsoft 365 consumer plans in late 2024. The ACCC’s initiating court documents identify 31 October 2024 as the date the Copilot integration applied to Microsoft 365 Personal and Family plans in Australia. Following that change, the ACCC says Microsoft adjusted retail pricing for those consumer SKUs—raising the annual Microsoft 365 Personal price from A$109 to A$159 (≈45%) and Microsoft 365 Family from A$139 to A$179 (≈29%).
The ACCC filed proceedings in the Federal Court on 27 October 2025, alleging the company’s communications to subscribers with auto‑renew enabled omitted a material option: a Microsoft 365 Personal Classic and Family Classic SKU that allowed customers to keep the existing feature set without Copilot at the old price. The regulator says that option was not referenced in the targeted renewal emails and the public blog post it relies upon, and that the Classic option only appeared later in the account cancellation flow, after a subscriber began the cancellation process.

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What the ACCC is alleging — the case in plain language​

• The ACCC says Microsoft communicated to auto‑renewing Microsoft 365 Personal and Family subscribers that, to maintain their subscription at renewal, they had to accept the Copilot integration and pay the higher price or cancel their subscription.
• The regulator alleges those communications were false or misleading by omission because there was a third option — the Classic plans — that preserved prior features and pricing but excluded Copilot.
• According to the ACCC, the Classic plans were not disclosed in the two targeted emails and the blog post singled out in its filing; instead, subscribers could access Classic only by initiating a cancellation flow in their Microsoft account. The ACCC’s initiating materials include screenshots showing the Classic option appearing late in the cancellation journey.

Those are regulator allegations. They form the public record and the evidentiary core the ACCC says it will rely on in Court. Microsoft has said it is reviewing the claims and reaffirmed commitments to consumer trust and compliance pending a detailed review. Major independent outlets have reported the same headline numbers and timeline, corroborating the core factual assertions in the ACCC’s materials.

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The communications at issue: what the ACCC says happened​

The ACCC points to three communications as central evidence:

• A Microsoft blog post published around 31 October 2024 that announced Copilot’s inclusion and stated price increases would apply at the next renewal.
• A first email to affected subscribers (example date in ACCC materials: 9 January 2025) telling them AI features were being added and the next annual charge would increase.
• A second reminder email sent seven days before renewal (example in the ACCC timeline: 13 April 2025, seven days before a 19 April 2025 renewal) giving the final opportunity to cancel before the higher charge took effect.

The ACCC’s contention is not that Microsoft changed product offerings or raised prices per se; it is that those changes were not presented to consumers with full, contemporaneous disclosure of all available options. In the regulator’s words, that omission created a materially misleading impression about the choices available to auto‑renewing subscribers.

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Verifying the headline facts (what can be independently confirmed)​

The most load-bearing factual claims in the ACCC’s filing are cross-checked against independent reporting and the ACCC’s own documents:

• The Federal Court filing date: 27 October 2025 — confirmed by the ACCC media release and contemporaneous reporting.
• The Copilot integration date cited by the ACCC: 31 October 2024 — stated in the ACCC materials and corroborated in press coverage.
• Price increases cited by the ACCC for Australia: Personal A$109 → A$159 (≈45%); Family A$139 → A$179 (≈29%) — consistently reported across ACCC documents and multiple independent outlets.
• The number of potentially affected accounts: ~2.7 million Australian Personal and Family subscribers — stated in the ACCC initiating documents and repeated in media reports.

These three datapoints (date of integration, price movements, and cohort size) are central to the ACCC’s theory of harm and are supported by multiple independent sources. Any other factual assertions dependent on internal Microsoft messaging, UX design intent, or the prevalence of consumer confusion remain, by definition, contentious and part of the dispute the Court will resolve.

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Legal framework and likely remedies​

Under the Australian Consumer Law (ACL), businesses must not engage in conduct that is false, misleading, or deceptive, including creating a misleading impression by omission of material facts. The ACCC’s claim centers on omission: that Microsoft’s renewal communications failed to disclose the Classic alternative and thereby misled a “reasonable consumer.”
Potential remedies the ACCC is seeking include:

• Declarations and injunctions to prevent ongoing conduct.
• Orders for consumer redress (refunds or compensation) for affected subscribers.
• Civil penalties. For corporations, maximum penalties for each contravention can be the greater of A$50 million, three times the benefit obtained, or 30% of adjusted turnover during the relevant period — although any penalty will depend on the Court’s findings and factual proof of harm or benefit.

The ACCC’s filing also includes screenshots and a “concise statement” that sets out the immediate factual basis for the claim; those documents are the starting point for discovery and expert evidence that will be tested during litigation.

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Why UX and timing matter: the “choice architecture” argument​

At the heart of the ACCC’s case is an argument about choice architecture: how product flows, timing, and message placement shape consumer perception and decisions. The regulator alleges Microsoft’s consumer-facing outreach—emails and a blog post timed around renewals—left auto‑renewing subscribers with the apparent choice to accept the higher Copilot-integrated plan or cancel, without making the Classic option visible at that decision point. The regulator contends the Classic option was only discoverable by initiating cancellation, which most consumers wouldn’t do simply to avoid a price change.
This is a textbook example of a regulator transplanting behavioral economics into consumer protection: where a company controls the interface and timing of disclosure, regulators increasingly treat omissions that change behaviour as potentially unlawful. If proven, the ACCC’s argument will turn on whether a reasonable, auto‑renewing subscriber would have understood they had three discrete, contemporaneous choices rather than two.

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Microsoft’s likely defenses and counterarguments​

Based on public statements and the documentation referenced in reporting:

• Microsoft can point to public-facing blog posts and support pages that explained Copilot’s inclusion and the availability of non‑Copilot alternatives, including the Classic SKUs and Microsoft 365 Basic. These items will form part of the company’s defense that alternatives were available and publicly disclosed.
• Microsoft may argue the necessary disclosures were made in reasonable channels (blog post + email notifications + account settings), and that some users will have proactively found and used those pathways.
• The company might contest the ACCC’s characterization of the cancellation flow as the only way to reach Classic, or argue that any UX ambiguity was not deliberate and did not satisfy the legal threshold for misleading conduct.
• The ACCC, by contrast, will rely on contemporaneous consumer complaints, screenshots, and the “reasonable consumer” standard to show the omission had practical consequence for millions of auto‑renewing accounts.

Ultimately, the litigation will hinge on documentary evidence, internal communications revealed in discovery, and expert testimony on consumer behaviour and interface design.

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Precedents and global implications​

This case will be watched closely for several reasons:

• It is one of the first high‑profile regulatory challenges addressing the bundling of paid AI functionality into existing consumer subscriptions and the disclosure obligations that entails.
• If the ACCC succeeds, it could set a precedent that platform providers must prominently disclose downgrade/legacy options at the same time and with comparable prominence as upgraded bundles—particularly for products that renew automatically and are used for essential tasks.
• The ruling could influence regulatory scrutiny elsewhere (EU, UK, North America) where concerns about subscription transparency, dark patterns, and AI monetization are already active regulatory topics.

For product teams at global tech companies, a finding against Microsoft would raise the compliance bar on how paid AI features are introduced and communicated to incumbent subscribers, obliging clearer, timely, and discoverable opt-out or legacy paths.

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Consumer impact and practical steps for subscribers​

Millions of Australians are central to this dispute. Whether or not the ACCC proves its case, consumers should be aware of how platform billing and auto‑renew mechanics can materially affect their outlays.
Practical steps for subscribers (numbered for clarity):

• Review renewal dates in your Microsoft account and confirm current SKU and renewal price.
• Check whether a “Classic” or non‑Copilot option is available in the subscription management flow—note where that option appears (front‑facing vs only during cancellation).
• If you were auto‑renewed at a higher price and believe you were not properly informed of available alternatives at the time, preserve any emails and screenshots and consider contacting the account provider and your local consumer protection agency.
• For refunds or redress, follow official ACCC guidance if you believe you fall within the affected cohort; the ACCC has indicated it will seek consumer redress as part of the proceedings.

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What this means for product, legal, and UX teams​

• Product managers must treat subscription changes that affect billing as regulatory events: timing, wording, and placement of messages matter as much as the legal content.
• UX designers should avoid designs that make downgrade or legacy options discoverable only via atypical actions (e.g., initiating cancellation).
• Legal and compliance teams must coordinate with product and marketing to ensure communications to auto‑renewing customers include all realistic, available options at the decision point.
• Data and analytics teams should instrument flows to detect when users are forced into circuits that obscure options; this evidence will also be vital to defend or prosecute claims in court.

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Risks, open questions, and claims that need caution​

• The ACCC’s central claim that Microsoft “deliberately omitted” references to Classic plans is an allegation in court and not a judicial finding. That allegation will be tested through discovery and cross‑examination. Readers should treat the ACCC’s statements as regulatory pleadings until a Court decides.
• Microsoft has pointed to public blog posts and support pages documenting options; the adequacy and prominence of those disclosures relative to the renewal notices remains disputed and will be central evidence.
• The exact mechanics of the account flow (for example, whether the Classic option was discoverable anywhere else in account settings without cancelling) is a factual detail that will be clarified during litigation. The ACCC’s screenshots are persuasive but not dispositive until tested in Court.

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Broader regulatory message: transparency in the era of paid AI​

This litigation crystallises a broader regulatory posture: authorities expect greater transparency when companies convert previously optional features into components of core subscription tiers and materially change prices.
Key regulatory signals illustrated by the ACCC’s action:

• Regulators will scrutinise the manner of disclosure, not just the presence of disclosure.
• Choice architecture that effectively channels consumers toward higher-priced outcomes — especially when automatic renewal is involved — invites enforcement action.
• Paid AI features layered onto essential productivity suites will be treated as commercially significant changes that require clear, contemporaneous customer-facing notice.

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Conclusion​

The ACCC’s Federal Court proceedings against Microsoft over the Copilot integration and Microsoft 365 price increases is a watershed moment for subscription commerce and the monetization of generative AI. The regulator’s detailed complaint focuses on omission and the timing and placement of disclosures to auto‑renewing subscribers—alleging Microsoft created a misleading two‑option impression while a lower‑cost Classic alternative existed but was not made sufficiently visible at the point consumers had to decide. Those allegations, including the cohort size (≈2.7 million) and the headline price movements (Personal A$109 → A$159; Family A$139 → A$179), are verifiable across the ACCC’s initiating materials and independent reporting.
Beyond the parties involved, the case will shape expectations for how companies launch paid AI features inside subscription products: clear, timely, and front‑facing disclosure of downgrade or legacy options is no longer merely good practice—it is likely to be an enforceable regulatory expectation. Product teams, legal counsel, and UX designers should treat this litigation as an imperative to design transparent subscription change processes that protect consumer choice and withstand regulatory scrutiny.

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Source: Indiablooms Australia’s ACCC sues Microsoft for allegedly misleading 2.7 million customers over Copilot integration | Indiablooms - First Portal on Digital News Management