ACCC Sues Microsoft in Australia Over Copilot Price Rise in Microsoft 365

Microsoft is facing a high‑stakes legal challenge in Australia after the Australian Competition and Consumer Commission (ACCC) filed Federal Court proceedings alleging the company deliberately misled roughly 2.7 million Australian Microsoft 365 customers when it folded its Copilot AI assistant into consumer subscriptions and raised renewal prices. The ACCC says Microsoft told auto‑renewing subscribers they either had to accept the higher Copilot‑integrated price or cancel — while failing to disclose a contemporaneous third option, the Microsoft 365 “Classic” plans, which retained the previous feature set and price and was only presented late in the cancellation flow.

Background and timeline​

Microsoft began integrating Copilot — its consumer‑facing generative AI assistant — into Microsoft 365 Personal and Family subscriptions in late 2024, with the company applying those changes in Australia on 31 October 2024. As part of that rollout Microsoft adjusted retail prices for the affected consumer SKUs: the annual Microsoft 365 Personal price moved from A$109 to A$159 (about a 45% increase) and the annual Microsoft 365 Family price rose from A$139 to A$179 (about a 29% increase). These headline numbers are central to the ACCC’s economic‑harm allegation.
The ACCC says its investigation drew on hundreds of consumer complaints, screenshots, forum commentary and the communications Microsoft sent to subscribers — namely two targeted emails and a blog post notifying auto‑renewing customers of the Copilot integration and impending renewal price increases. The regulator lodged the initiating court documents in the Federal Court on 27 October 2025, seeking declarations, injunctions, consumer redress and substantial penalties under Australian Consumer Law.

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What the ACCC alleges — the core claim​

• Microsoft’s communications to auto‑renewing Microsoft 365 Personal and Family subscribers conveyed a binary choice: accept Copilot and the higher renewal price, or cancel the subscription.
• At the time those communications were sent, the ACCC says Microsoft also offered Microsoft 365 Personal Classic and Microsoft 365 Family Classic plans that preserved the prior price and feature set without Copilot.
• The ACCC’s central allegation is that Microsoft did not disclose the Classic option in the renewal communications and only made that option discoverable once a user initiated the cancellation flow — effectively hiding the cheaper alternative and nudging consumers toward the pricier Copilot plans.

The regulator frames the alleged act as an omission of material information that would have influenced consumer choice and therefore as potentially misleading conduct under the Australian Consumer Law. The ACCC has included screenshots and a concise statement with its initiating court papers showing where the Classic option appeared in the account cancellation UX.

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Verifiable facts and independent corroboration​

Key factual claims and independent confirmation:

• Copilot integration date and rollout timeline: ACCC materials identify 31 October 2024 as the date Copilot was applied to consumer Microsoft 365 Personal and Family plans in Australia; this timeline is corroborated by reporting from major news outlets and the public record.
• Price increases: the ACCC cites an increase from A$109 → A$159 for Personal and A$139 → A$179 for Family; those figures are reported consistently in the ACCC complaint and independent press coverage.
• Number of potentially affected accounts: the regulator quantifies the cohort at approximately 2.7 million Australian subscribers — a figure stated in the ACCC’s initiating materials and cited across mainstream outlets.
• Communications at issue: the ACCC identifies two emails and a blog post as the specific outbound communications it will rely on in court; those items form the evidentiary core of the complaint.

These claims are drawn from the ACCC’s publicly filed materials and multiple independent news reports summarising the regulator’s case. The details above (dates, prices, and the 2.7M figure) are therefore verifiable against primary regulator documents and reputable press coverage.

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Microsoft’s public response and likely defence themes​

Microsoft has said it is reviewing the ACCC’s claim and has emphasised its commitment to consumer trust and compliance. The company has previously published product posts and support pages describing Copilot’s inclusion in consumer plans and documentation for alternatives available to existing subscribers — including references to Classic SKUs and other non‑Copilot plans. Whether those public pages — and their discoverability in practice — will be sufficient to defeat the ACCC’s omission claim is a primary battleground.
From a defence perspective Microsoft is likely to argue:

• The Classic plans existed and were documented publicly.
• The company informed customers via multiple channels and provided in‑app controls for disabling or opting out of Copilot features.
• Any failure to see the Classic option stemmed from individual user behaviour or was an isolated UX variance, not a deliberate concealment designed to mislead.

The ACCC’s counter will lean on the reasonable‑consumer standard: did the average auto‑renewing subscriber, given the renewal notices sent, reasonably believe they had only two choices? The screenshots and the timing of disclosures are therefore central.

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Legal mechanics: Australian Consumer Law and remedies on the table​

Under the Australian Consumer Law, misleading or deceptive conduct and omission of material facts in trade or commerce can attract civil remedies. For corporations, the maximum penalty for each contravention is the greater of:

• A$50 million; or
• Three times the total benefit obtained and reasonably attributable to the conduct; or
• 30% of the corporation’s adjusted turnover during the breach period, if the benefit cannot be determined.

The ACCC is seeking declarations, injunctions, consumer redress (refunds or compensation) and costs. Any monetary penalty will depend on the court’s findings about whether Microsoft’s communications were misleading and the quantum of consumer harm or benefit derived.

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UX, choice architecture and the “dark patterns” debate​

This case sits at the intersection of consumer law, subscription economics, and product UX design. Regulators and consumer advocates have increasingly scrutinised the use of interface design to influence consumer decisions — especially where auto‑renewals and bundled services are involved.

• The ACCC’s allegation centers on choice architecture: the claim that Microsoft positioned the Classic option behind a cancellation flow so that it would be discovered only by customers who were already cancelling. If proven, that is textbook nudging through interface design.
• Public enforcement actions in 2025 have shown regulators will not avoid big tech: the US Federal Trade Commission’s recent $2.5 billion settlement with Amazon for allegedly using dark patterns to enroll and retain Prime members underscores a global enforcement trend against opaque subscription practices. That settlement included consumer redress and an order to simplify enrolment and cancellations. The Amazon case is an instructive comparator for how agencies view deceptive subscription flows.

Design teams and product managers must therefore factor legal and regulatory risk into subscription UX decisions, particularly when adding paid AI features that materially change a product’s value proposition.

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Consumer impact: who likely lost out and why it matters​

The ACCC frames the alleged harm as both economic and informational:

• Economic harm: millions of Australians may have had their subscriptions automatically renew at materially higher prices for a product mix that included an AI assistant they did not want or use.
• Informational harm: consumers were allegedly denied an informed choice at the moment the renewal decision was communicated.

The combination matters because Microsoft 365 is a bundled product used daily by many consumers. Cancelling a Microsoft 365 subscription is not a trivial decision for households who rely on Word, Excel, PowerPoint, Outlook and OneDrive — creating a stickiness that makes renewal notices especially powerful as behavioural triggers. The ACCC’s argument leans on that bounded rationality: given the perceived friction and the essentiality of the bundled apps, many customers would not have cancelled but would have opted for the Classic plan if it had been clearly disclosed at the point of renewal communication.

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Cross‑industry context and regulatory momentum​

Enforcement in subscription and AI monetisation is accelerating:

• The Amazon/FTC settlement in late September 2025 — a landmark $2.5 billion resolution — demonstrates regulators in multiple jurisdictions are prepared to impose large penalties for opaque subscription flows. That action explicitly addressed enrolment and cancellation friction and used ROSCA and FTC enforcement mechanics to secure consumer redress.
• Globally, competition and consumer agencies are investigating how AI features are monetised inside existing products. This Microsoft case will be watched as a bellwether for whether regulators treat failure to contemporaneously disclose lower‑cost, non‑AI alternatives as a standalone consumer‑law violation rather than a mere product‑pricing dispute.

Companies embedding paid AI into established subscription services should expect closer scrutiny — both for the substance of the offering and for the transparency and prominence of presentation to affected customers.

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Strengths in the ACCC’s case — why the allegations are credible​

• Primary evidence: The ACCC filed screenshots and a concise statement attached to its court materials showing the Classic option surfaced only after initiating cancellation. Primary evidence of what users actually saw is compelling in consumer law.
• Scale of consumer reporting: The ACCC’s investigation relied on hundreds of consumer complaints and forum posts, indicating the issue was widespread rather than anecdotal. Regulators typically act when patterns of consumer harm emerge at scale.
• Clear economic stakes: The price increases (45% and 29%) are large and easily quantified; consumers who renewed automatically would have identifiable overpayments relative to the Classic price, simplifying computation of consumer redress if the court finds misconduct.

These strengths make the ACCC’s factual and legal case plausible and legally actionable.

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Weaknesses and legal risks for the ACCC’s case​

• Public documentation by Microsoft: Microsoft did publish blog posts and support pages referencing Copilot and available alternatives. The company will point to those public materials and in‑app controls to argue information was available and that no deliberate concealment occurred. Whether that documentation was sufficient and reasonably discoverable for auto‑renewing subscribers is the contested issue.
• Proving intent: The ACCC alleges a deliberate omission to increase takeup of Copilot plans. Proving intent to mislead is harder than showing an omission; the ACCC’s case may succeed on the omission or reasonable‑consumer standard without needing to prove deliberate intent, but intent allegations raise the evidentiary bar.
• Heterogeneous user experience: If Microsoft can show that some customers were clearly directed to Classic options in timely ways or that the cancellation flow varied by region or account type, the regulator’s claim of systemic concealment becomes harder to sustain. The case will therefore hinge on representative user experiences and on whether the average auto‑renewing subscriber was misled.

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Practical implications for users and IT decision‑makers​

• Review subscription renewal settings: Customers with auto‑renew should check their Microsoft account subscription page and billing history and, if necessary, consider switching to a non‑Copilot SKU or Classic plan where available.
• Document evidence: Users who believe they were misled should save renewal emails, screenshots of account pages and transaction receipts — these are the types of items regulators and courts use to assess claims.
• For IT purchasers: Organizations and families should treat Copilot as a distinct line‑item in procurement and budgeting; verify what features are included for each licence type and confirm cancellation/opt‑out processes before rolling changes out at scale.

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Unverified or unclear claims — cautionary notes​

Some ancillary claims circulating in commentary — for example, an earlier lawsuit by ChatGPT users accusing Microsoft of exploiting its OpenAI cloud deal by inflating platform prices while decreasing service quality — have not been corroborated in prominent, authoritative reporting at the time of the ACCC filing. Those assertions should be treated as unverified until substantiated by reliable primary sources or court filings. When coverage is limited or sourced only to opinion pieces or forums, flagging the claim as unconfirmed is the responsible approach.

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How regulators will likely proceed and what to watch​

• Discovery phase: Expect the ACCC and Microsoft to exchange internal communications, screenshots, analytics about clicks and conversion rates, and customer‑service logs showing complaints and cancellation flows. These materials will be decisive.
• Evidence on messaging: The wording of the two emails and the blog post the ACCC highlights will be dissected to determine whether the communications created a materially misleading impression.
• Potential remedies: If the court finds unlawful conduct, remedies could include: declarations of contravention; injunctions to change communications and in‑app flows; orders for consumer redress or refunds; and civil penalties calculated under the statutory formulations.
• Global ripple effects: A finding against Microsoft may prompt other regulators (EU, UK, US state attorneys general) to revisit similar subscription or AI monetisation practices — making subscription‑UX transparency a new compliance priority for global tech firms.

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Conclusion — a precedent‑setting moment for AI monetisation and subscription transparency​

The ACCC’s action against Microsoft is more than a single enforcement case: it is a doctrinal test of how consumer law applies to modern subscription models layered with paid AI features. The regulator’s allegations — that Microsoft deliberately omitted a material, cheaper alternative and buried it deep in a cancellation flow — raise fundamental questions about disclosure, design ethics and what counts as an informed choice in the era of auto‑renewals and bundled software.
For consumers, it reinforces the need to scrutinise renewal notices and to document communications when prices rise. For product teams, it is a clear warning: product design and legal compliance must be tightly aligned when monetising AI. For regulators, the case offers a playbook to challenge opaque subscription defaults. The Federal Court’s handling of this litigation will be closely watched by consumers, companies and regulators worldwide — and its outcome will likely shape how AI features are marketed, priced and disclosed inside subscription products going forward.

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Source: CX Today Microsoft Faces Legal Action After Allegedly Misleading 2.7 Million Copilot Customers