The head of Australia’s competition watchdog has slammed Microsoft, claiming it “deliberately hid” a subscription option from Australian customers.
The Australian Competition and Consumer Commission (ACCC) has sued the tech giant for allegedly misleading about 2.7 million Australians over its Microsoft 365 subscriptions.
The ACCC has launched proceedings against Microsoft for allegedly misleading customers about subscription options and price increases after it integrated its AI assistant, Copilot, into Microsoft 365 plans.
The regulator has alleged that since late last year, the tech giant told subscribers of certain plans that they must pay a higher price to maintain their subscriptions, which would now include Copilot, or they would need to cancel.
The ACCC said Microsoft misled customers by not disclosing that subscribers could retain their current plans, without Copilot, at their existing lower prices.
“Following a detailed investigation, the ACCC alleges that Microsoft deliberately hid this third option, to retain the old plan at the old price, in order to increase the uptake of Copilot and the increased revenue from the Copilot integrated plans,” ACCC chair Gina Cass-Gottlieb said.
The ACCC chair was scathing of the conduct, telling a press conference that the regulator viewed it as “very serious conduct” and would be seeking a significant penalty.
She said the regulator will be looking for a penalty that shows that non-compliance with the Australian Consumer Law “is not just a cost of doing business”.
A Microsoft spokesperson told ABC News the company was reviewing the ACCC’s claim in detail.
“Consumer trust and transparency are top priorities for Microsoft,” they said.
ABC News revealed in February that a customer had reported the tech giant to the regulator over the pricing changes.
After Microsoft increased its Australian Microsoft 365 subscription prices at the start of the year, users flocked to online forums to criticise the changes.
The proceedings have been lodged in the Federal Court against Microsoft Australia and its parent company, Microsoft Corporation.
Microsoft allegedly failed to disclose ‘classic’ subscription option
The ACCC has alleged that since October 31, 2024, Microsoft told subscribers of Microsoft 365 personal and family plans with auto-renewal enabled that to maintain their subscription they must accept the integration of Copilot and pay higher prices for their plan or, alternatively, cancel their subscription.
The regulator said Microsoft’s communication with subscribers did not refer to the existence of the cheaper “classic” plans, and the only way subscribers could access them was to begin the process of cancelling their subscription.
This involved navigating to the subscriptions section of their Microsoft account and selecting “cancel subscription”.
It was only on the following page that subscribers were given the option to instead move to the classic plan.
On Monday, Ms Cass-Gottlieb thanked the more than 100 Australian consumers who made complaints to the ACCC’s Infocentre in late 2024 and early 2025 about the Microsoft changes.
“The Microsoft Office apps included in 365 subscriptions are essential in many people’s lives, and given there are limited substitutes to the bundled package, cancelling the subscription is a decision many would not make lightly.
“We’re concerned that Microsoft’s communications denied its customers the opportunity to make informed decisions about their subscription options which included the possibility of retaining all the features of their existing plan without Copilot and at the lower price.
“We believe many Microsoft 365 customers would have opted for the classic plan had they been aware of all the available options.”
Consumer advocates welcomed the actions from the ACCC.
“Microsoft has significant market share — therefore, high numbers of Australians have arguably been misled into purchasing a more expensive subscription package than they may have wanted or needed,” Consumer Action Law Centre chief executive Stephanie Tonkin said.
“This is exactly the sort of case our consumer regulator should be taking to protect ordinary Australians in a concentrated market.”
The Consumer Policy Research Centre said “businesses should be held accountable for prioritising tactics over trust and failing to treat their customers with the care and respect they deserve”.
The independent think tank noted that 75 per cent of Australians with subscriptions have experienced difficulty when trying to cancel, while one in 10 have given up trying to cancel and continued to pay for unwanted services. (ABC)