Australia’s competition regulator has filed a lawsuit against Microsoft (MSFT.O), alleging the company misled millions of customers into paying inflated prices for its Microsoft 365 software after bundling it with its AI assistant, Copilot.
The Australian Competition and Consumer Commission (ACCC) said that since October 2024, Microsoft misrepresented its offerings to about 2.7 million users, suggesting they were required to switch to higher-priced plans that included Copilot. In reality, a cheaper “classic” plan without the AI tool remained available but was not clearly disclosed.
Following the AI integration, the annual price of Microsoft 365 Personal jumped 45% to A$159 ($103), while the Family plan rose 29% to A$179, according to the ACCC. The regulator said Microsoft only revealed the lower-cost option after customers began the cancellation process, an act it described as a “deceptive design” that breached Australia’s consumer protection laws.
“Microsoft’s communications gave a false impression that consumers had no choice but to accept the price increase,” the ACCC said, adding that such tactics violated laws prohibiting misleading or deceptive conduct.
The agency seeks financial penalties, consumer redress, and injunctions against both Microsoft’s Australian subsidiary and its U.S. parent company. Under Australian law, penalties can reach A$50 million per breach, or up to 30% of corporate turnover if ill-gotten benefits cannot be quantified.
Microsoft responded that it was reviewing the complaint in detail but offered no further comment. The case marks one of the first major global legal challenges against a company for AI-linked price increases, highlighting growing regulatory scrutiny over how tech giants integrate and monetize artificial intelligence tools.
