ACCC Takes Microsoft to Court Over Copilot Renewal Choices in Australia

Australia’s competition regulator has launched a legal attack on Microsoft, alleging that the company misled some 2.7 million Australian Microsoft 365 subscribers about their renewal choices after bundling the Copilot AI assistant into consumer plans and raising prices. The Australian Competition and Consumer Commission (ACCC) filed proceedings in the Federal Court on 27 October 2025, saying Microsoft’s communications — two emails and a blog post — gave the false impression that customers only had two choices at renewal: accept the new, higher-priced Copilot-integrated plan or cancel. The ACCC says a third option existed and was effectively hidden: a “Microsoft 365 Personal or Family Classic” plan that preserved previous features without Copilot at the prior price.

Background​

Microsoft introduced Copilot as a consumer-facing generative AI assistant and integrated it into Microsoft 365 consumer plans in late 2024. The ACCC’s documents say Copilot was rolled into Microsoft 365 Personal and Family plans in Australia on 31 October 2024. Following that integration, Microsoft adjusted retail pricing for these consumer subscriptions: the annual Microsoft 365 Personal price moved from A$109 to A$159 (a 45% rise), and the Microsoft 365 Family price went from A$139 to A$179 (a 29% rise).
The regulator’s case rests on the claim that Microsoft communicated those changes to auto-renewing subscribers through two email notices and a blog post, but did not disclose the availability of the lower-priced Classic plans in those communications. According to the ACCC, the Classic plan option only appeared late in the cancellation flow — after a customer had initiated cancellation — meaning many consumers may have been steered into accepting the higher-priced upgrade rather than being given a transparent choice.

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What the ACCC is alleging​

The heart of the claim​

The ACCC alleges that Microsoft’s emails and blog post told subscribers they needed to accept Copilot and pay the higher fee to keep their subscription, or cancel the subscription entirely. The regulator says that messaging was false or misleading because it omitted a material fact: subscribers could instead move to a Classic plan that retained their existing features without Copilot at the prior price.

The scale and legal framing​

• Alleged affected customers: ~2.7 million Microsoft 365 Personal and Family subscribers in Australia.
• Key dates: Copilot integration and announced price changes on 31 October 2024; ACCC court filing on 27 October 2025.
• Communications in question: Two emails to auto-renewing subscribers and a Microsoft blog post informing customers of Copilot integration and impending price increases.
• Relief sought by ACCC: The ACCC is pursuing penalties, injunctions, declarations, consumer redress, and costs. Corporate fines under Australian Consumer Law can be substantial — the ACCC notes maximum penalties that include a statutory cap (e.g., A$50 million per contravention) or other turnover-linked calculations depending on the court’s approach.

How the alleged concealment worked​

The ACCC’s investigation found that the only way many subscribers could discover the Classic plan was by initiating the cancellation process in their Microsoft account. On the page that followed — after clicking “Cancel subscription” — users were reportedly presented with an option to switch to the Classic plan. The ACCC argues that placing the option behind a cancellation flow effectively hid it from many consumers and impeded informed choice.

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Timeline of the user experience (example)​

• A customer buys an annual Microsoft 365 Personal subscription and enables auto-renewal.
• Microsoft announces Copilot integration and a future price increase via a blog post (31 Oct 2024).
• Microsoft sends emails to auto-renewing subscribers warning their next renewal will be at a higher price unless they cancel before a specified date.
• On the renewal date, the subscription auto-renews at the higher Copilot-integrated price.
• If a subscriber chooses to cancel and follows the cancellation steps, the option to switch instead to a Classic plan at the old price appears late in that flow.

This is the exact customer flow the ACCC has emphasised in its court documents, and it forms the factual backbone of the regulator’s misleading-conduct case.

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Why this matters: consumer choice, transparency, and "dark patterns"​

At stake are fundamental consumer protections: accurate, timely disclosure of material facts that affect buying decisions. The ACCC frames Microsoft’s conduct as a refusal to disclose a material alternative — the Classic plan — in initial renewal communications. That omission, the regulator says, effectively prevented consumers from making an informed choice at renewal.
This case also brings into sharper focus a broader UX and regulatory battleground: the use of user-interface design and flows to influence decisions. When a lower-cost option is placed behind a cancellation flow, the result can be described as a coercive or obfuscated experience — commonly critiqued as a form of dark pattern when design is used to nudge or mislead users.
Regulators worldwide are increasingly scrutinising digital platforms for such practices. If the court accepts the ACCC’s position, it could set a strong local precedent that subscription providers must clearly disclose all materially different renewal options in primary communications rather than burying cheaper or opt-out alternatives in obscure account flows.

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Microsoft’s position and immediate response​

Microsoft has publicly stated it is reviewing the ACCC’s claims and emphasised commitments to transparency and consumer trust. The company’s public responses characterise its communications as intended to inform customers about the value added by Copilot and about price changes on renewal, while asserting a willingness to cooperate with the regulator.
Crucially, the ACCC’s claims are allegations at this stage. The court process will test the veracity of the regulator’s factual claims and Microsoft’s intent. The presence of screenshots in the ACCC’s initiating documents — including the cancellation page that reportedly reveals the Classic plan — will be central evidentiary material. Microsoft disputes the regulator’s characterisation of its messages; the outcomes will depend on how the Federal Court assesses the communications themselves, the context, and the company’s internal decision-making.

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Legal and regulatory implications​

For Microsoft​

• Financial risk: If the court finds breaches of the Australian Consumer Law, penalties could be substantial. The ACCC’s release highlights statutory penalty frameworks that may apply per contravention, including fixed caps or turnover-based calculations.
• Remediation and redress: The ACCC seeks orders for consumer redress and refunds where consumers were misled. Microsoft could be required to notify affected customers, provide compensation, or change how it presents subscription options.
• Reputational damage: Irrespective of the legal outcome, the public nature of the case amplifies scrutiny over Microsoft’s approach to consumer communications and AI monetisation.

For other platforms and regulators​

• Precedent-setting potential: A finding against Microsoft would strengthen regulatory arguments that companies must present all material subscription alternatives clearly and in primary communications, not hidden in account flows.
• Global ripple effects: Regulators in other jurisdictions monitoring subscription models, AI add-ons, and platform transparency could cite the decision when evaluating similar conduct.
• Design and compliance standards: Companies will likely re-evaluate subscription UX, legal sign-off procedures, and how add-on features affecting price are disclosed at renewal.

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Product strategy and the value calculus behind Copilot​

Microsoft’s decision to bundle Copilot into consumer plans reflects a broader product strategy: convert AI capabilities into a premium differentiator that warrants higher recurring revenue. Copilot adds new features — generative writing, context-aware suggestions, and productivity automation — that can materially shift perceived value for many users.
From a business perspective, shifting customers from an older price to a higher recurring charge is a tried-and-tested revenue strategy. Where that shift becomes legally sensitive is how the company communicates the new value proposition and whether it provides reasonably accessible alternatives at prior pricing. The difference between an acceptable upsell and misleading conduct often hinges on timing, clarity, and the availability of clear opt-out or legacy options.

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Strengths of the ACCC’s case​

• Documentary evidence: The ACCC has produced screenshots showing the Classic plan appearing late in the cancellation flow and relies on the actual emails and blog post that Microsoft sent to subscribers.
• Consumer complaints: The regulator says it received consumer complaints that helped uncover the flow and corroborate claims about how communications were received.
• Clear legal standard: Australian Consumer Law requires businesses to provide accurate and not misleading information about prices and services. The alleged omission — not telling consumers about the Classic plan in primary communications — appears squarely within the scope of the law.
• Quantifiable impact: The price increases are concrete and substantial (45% for Personal, 29% for Family), which underlines that the omission, if proven, had tangible financial consequences for many consumers.

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Weaknesses and risks to the ACCC’s argument​

• Intent vs. inference: The ACCC alleges deliberate concealment. Proving deliberate intent rather than negligence or poor UX design will be more challenging and will depend on internal communications, decision-making records, and witness testimony.
• Disclosure in other channels: Microsoft may argue that sufficient disclosure existed — for example, on the blog post or through account pages — and that users who read the communications were informed. The company can argue that the Classic plan was accessible, and that decisions to auto-renew are governed by existing terms of service.
• Variation in user experiences: Different users may have seen different messages or account flows depending on timing, geography, platform (web vs. mobile), and individual account settings. That variability complicates the ACCC’s assertion of a uniform experience for all affected users.

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Wider consumer and market impacts​

Trust in tech platforms​

This dispute is emblematic of a broader tension: consumers expect transparency when prices change, particularly for subscription services they use constantly. A finding in favour of the ACCC would be a clear signal that regulators expect explicit, upfront disclosure of alternatives and pricing, not just passive availability within account settings.

AI monetisation and regulatory appetite​

As companies increasingly monetise AI features by embedding them into existing products, regulators will be sensitive to how those changes are framed and communicated. The Microsoft case could become a touchstone for rules about how AI-related upgrades are marketed and how legacy user options are treated.

UX design scrutiny​

Design practices that intentionally obscure options or create friction to opt out will attract regulatory attention. Companies may need to balance marketing objectives with compliance by making opt-out or legacy plans easy to find and explicitly mentioned in renewal notices.

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Practical guidance for subscribers​

• Review subscription emails carefully for renewal dates and stated prices.
• Log into your Microsoft account and open the subscriptions/renewals section to confirm current plan type and renewal price.
• If you see an unexpected price increase, proceed to the account management or cancellation flow to check whether a Classic or legacy option is offered.
• Keep copies (screenshots) of emails, account pages, and renewal confirmations — these can be useful if you seek a refund or regulatory help.
• Consumers who believe they were misled can contact the ACCC or their local consumer protection agency to lodge a complaint.

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What to watch next​

• Court hearings: Expect preliminary court directions and confidentiality rulings early in the proceedings; the ACCC’s concise statement is an initial public filing that the court will schedule.
• Evidence disclosure: Discovery processes may uncover internal Microsoft discussions that will be critical to establishing intent and design decisions.
• Regulatory outcomes: Any settlement, consent order, or judgment could include consumer redress, a requirement to change communications practices, and financial penalties.
• Global reactions: Watch how other regulators and consumer-rights groups respond; comparable complaints or enforcement actions could emerge in other markets if this litigation gains traction.

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Critical analysis: balancing innovation with consumer protection​

Microsoft’s strategy to monetise Copilot via Microsoft 365 is understandable from a product and revenue standpoint. Generative AI features can significantly increase user productivity and provide grounds for price differentiation. However, monetisation that materially changes price demands transparent, prominent communication of alternatives so that consumers can make informed decisions. The ACCC’s case probes exactly that balance: whether Microsoft’s communications were adequate or whether the company placed a cheaper alternative behind an obscure cancellation flow to nudge users to accept a pricier plan.
This litigation underscores two enduring tensions:

• Innovation vs. disclosure: Companies should be free to innovate and create premium tiering, but those changes must be accompanied by conspicuous disclosures about choices and costs.
• Design for conversion vs. design for clarity: UX that optimises conversions can cross into problematic territory when it obscures materially different consumer options.

If the court finds that Microsoft’s approach was misleading, it will not only reshape how Microsoft handles consumer communications but will also raise the bar for other tech companies that rely on subscription revenue and feature-driven upgrades.

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Risks and uncertainties​

• The ACCC’s allegations are serious, but they remain allegations pending judicial findings. A court could find that Microsoft’s disclosures were adequate or that the evidence does not establish deliberate concealment.
• The amount of redress and penalties is uncertain and will depend on the court’s assessment of the number of contraventions, the harm suffered by consumers, and Microsoft’s conduct.
• The technical specifics of account flows and platform variations mean some consumers may have seen the Classic plan without difficulty; establishing the prevalence of hidden options will be a contested factual question.
• Global regulatory responses may not be uniform; other jurisdictions could take different approaches to similar issues.

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Conclusion​

The ACCC’s Federal Court action against Microsoft represents a high-profile clash between a national consumer regulator and a major global technology company at the intersection of subscription monetisation and AI productisation. At issue are fundamental questions about disclosure, consumer choice, and the ethical use of design to influence behaviour. The regulator believes millions of Australians were effectively steered into higher-priced Copilot-integrated plans because a lower-cost Classic plan was not disclosed in primary renewal communications, while Microsoft says it will review the allegations and work with the regulator.
Beyond the immediate dispute, the case will reverberate across the tech industry: it clarifies that regulators are watching how AI features are folded into existing services and how subscription choices are presented. For consumers, it is a reminder to actively monitor renewal notices and account settings. For companies, it is a vivid reminder that product decisions and user-interface design must be aligned with a transparent disclosure regime, or risk legal, financial, and reputational consequences.

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Source: VOI.ID Australia Sues Microsoft For Alleged Installation Of Microsoft 365 Users