Australian government sues Microsoft for 'deliberately' hiding Copilot-free Microsoft 365 plans

The Australian Competition and Consumer Commission, or ACCC, is an independent government body that monitors fair trading and robust consumer protection laws in Australia. The body's latest target is Microsoft, which it is suing for allegedly misleading 2.7 million Australian consumers over its Microsoft 365 subscriptions.

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It all boils down to recent price increases for Microsoft 365 plans, which cover the Microsoft Office suite, cloud storage, and more. Basically, Microsoft increased the subscription price for Microsoft 365 after integrating its Copilot AI tools and services. The only problem, from the ACCC's perspective, is that the company "deliberately hid" the fact that subscribers could have kept the old price if they didn't want Copilot.

According to the ACCC's investigation, once Microsoft increased prices on October 31, 2024, customers were notified that their auto-renewal would include the higher Microsoft 365 pricing, with the only other option being to cancel the service. However, once the cancellation process began, customers were informed about a hidden "classic" Copilot-free plan at the previous price point.

This setup covered both personal and family Microsoft 365 plans. "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.

"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," Gina Cass-Gottlieb added.

Even though the cost of the new Copilot-ready Microsoft 365 plans increased by up to 40% for personal users and 29% for families, the ACCC isn't suing Microsoft for pricing. It's related to Microsoft not disclosing all options to its customers, and for that, it's treating the issue very seriously and will seek a significant penalty. In fact, the ACCC will reportedly be seeking "penalties, injunctions, declarations, consumer redress and costs" in the Federal Court of Australia.

In response, a Microsoft spokesperson told ABC News Australia that "Consumer trust and transparency are top priorities for Microsoft," and that it is currently reviewing the claim.