The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against Microsoft, alleging the tech giant misled over 2.7 million Australians by quietly hiking Microsoft 365 subscription prices under the guise of AI innovation, without clearly disclosing that cheaper, Copilot-free “Classic” plans were still available.
At the heart of the case is Microsoft’s integration of its Copilot AI assistant into Microsoft 365 Personal and Family plans in late 2024. The ACCC claims Microsoft told auto-renewing subscribers they had two options: accept the new AI-enhanced plan at a higher price or cancel their subscription. What Microsoft allegedly failed to mention? A third option, those same plans, minus Copilot, at the original price, was still available, but only if users initiated the cancellation process and navigated through several steps.
The price jumps were significant: the Personal plan rose 45% from A$109 to (AUD)$159, and the Family plan increased 29% from (AUD)$139 to (AUD)$179. Microsoft communicated these changes via email and a blog post, but the ACCC argues those messages were misleading by omission. “We believe many Microsoft 365 customers would have opted for the Classic plan had they been aware of all the available options,” said ACCC Chair Gina Cass-Gottlieb.
If this sounds familiar, it should. Microsoft pulled a similar maneuver in the U.S. earlier in 2024, where Microsoft 365 Personal and Family plans saw price increases of $20 and $30 respectively, again tied to the rollout of Copilot. While the U.S. version didn’t spark regulatory action, it did raise eyebrows among consumers who questioned whether AI features they didn’t ask for were worth the added cost.
The ACCC’s lawsuit could have global implications. If successful, it may set a precedent for how tech companies must disclose pricing changes, especially when bundling AI features into essential productivity tools. It also raises broader questions about transparency in subscription models and the ethics of “dark pattern” design, where critical options are buried behind cancellation flows.
For those following Microsoft’s AI strategy, this lawsuit feels like a moment of reckoning.
The company has been aggressively monetizing its AI investments, from Copilot in Office to Azure’s OpenAI integrations. But as the AI hype cycle begins to wobble under the weight of inflated expectations and unclear ROI, Microsoft’s tactics look less like innovation and more like margin-chasing.
In other words: Microsoft isn’t just betting on AI, it’s banking on your inertia. And if the AI bubble bursts before the average user finds real value in these tools, don’t be surprised if Microsoft pivots again, parachuting toward the next big thing while leaving users to sort through the wreckage of another half-baked subscription upsell.
