ACCC sues Microsoft for allegedly deceptive tens of millions of Australians with Microsoft 365 subscription hikes

The head of the buyer watchdog has slammed Microsoft, claiming it “deliberately hid” a subscription possibility from Australian prospects.

The Australian Competition and Consumer Commission (ACCC) has sued the tech big for allegedly deceptive about 2.7 million Australians over its Microsoft 365 subscriptions.

The ACCC has launched proceedings in opposition to Microsoft for allegedly deceptive prospects about subscription choices and worth will increase after it built-in its AI assistant, Copilot, into Microsoft 365 plans.

The regulator has alleged that since late final yr, the tech big advised subscribers of sure plans that they need to pay the next worth to keep up their subscriptions, which might now embody Copilot, or they would wish to cancel.

The ACCC mentioned Microsoft misled prospects by not disclosing that subscribers might retain their present plans, with out Copilot, at their current decrease costs.

“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 mentioned.

The ACCC chair was scathing of the conduct, telling a press convention that the regulator seen it as “very serious conduct” and could be looking for a major penalty.

She mentioned the regulator will likely be searching for a penalty that exhibits that non-compliance with the Australian Consumer Law “is not just a cost of doing business”.

Loading…

A Microsoft spokesperson advised ABC News the corporate was reviewing the ACCC’s declare intimately.

“Consumer trust and transparency are top priorities for Microsoft,” they mentioned.

ABC News revealed in February {that a} buyer had reported the tech big to the regulator over the pricing adjustments.

After Microsoft elevated its Australian Microsoft 365 subscription costs in the beginning of the yr, customers flocked to on-line boards to criticise the adjustments.

The proceedings have been lodged within the Federal Court in opposition to Microsoft Australia and its mum or dad firm, Microsoft Corporation.

Microsoft allegedly didn’t disclose ‘traditional’ subscription possibility

The ACCC has alleged that since October 31, 2024, Microsoft advised subscribers of Microsoft 365 private and household plans with auto-renewal enabled that to keep up their subscription they need to settle for the mixing of Copilot and pay increased costs for his or her plan or, alternatively, cancel their subscription.

The regulator mentioned Microsoft’s communication with subscribers didn’t consult with the existence of the cheaper “classic” plans, and the one means subscribers might entry them was to start the method of cancelling their subscription.

This concerned navigating to the subscriptions part of their Microsoft account and deciding on “cancel subscription”.

It was solely on the next web page that subscribers got the choice to as an alternative transfer to the traditional plan.

On Monday, Ms Cass-Gottlieb thanked the greater than 100 Australian customers who made complaints to the ACCC’s Infocentre in late 2024 and early 2025 concerning the Microsoft adjustments.

“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 involved that Microsoft’s communications denied its prospects the chance to make knowledgeable selections about their subscription choices which included the potential of retaining all of the options of their current plan with out Copilot and on the lower cost.

“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 govt Stephanie Tonkin mentioned.

“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 mentioned “businesses should be held accountable for prioritising tactics over trust and failing to treat their customers with the care and respect they deserve”.

The unbiased assume tank famous that 75 per cent of Australians with subscriptions have skilled problem when making an attempt to cancel, whereas one in 10 have given up making an attempt to cancel and continued to pay for undesirable companies.

Australians needed to decide out slightly than decide in

The ACCC will likely be looking for orders together with penalties, injunctions, declarations, shopper redress and prices.

The shopper watchdog has argued the tens of millions of Australian customers who have been allegedly misled by Microsoft might have suffered financial hurt via the automated renewal of their subscription with Copilot integration at the next worth.

The ACCC may even be looking for shopper redress, on this case for Microsoft 365 private and household subscribers affected by the alleged conduct.

Following the mixing of Copilot, the annual subscription worth of the Microsoft 365 private plan elevated by 45 per cent from $109 to $159.

The annual subscription worth for the Microsoft 365 household plan elevated by 29 per cent from $139 to $179.

Microsoft despatched two emails and revealed a weblog publish to tell auto-renewing subscribers — as of October 31, 2024 — concerning the Copilot integration and the approaching worth enhance that might apply at their subsequent renewal.

These three items of communication are central to the ACCC’s case.

“We allege that Microsoft’s two emails to existing subscribers and the blog post were false or misleading as they conveyed that consumers had to accept the more expensive Copilot-integrated plans, and that the only other option was to cancel,” Ms Cass-Gottlieb mentioned.

The ACCC mentioned to conduct its investigation, it drew on a major variety of shopper stories, in addition to commentary in on-line boards reminiscent of Reddit.

Ms Cass-Gottlieb mentioned the regulator has not launched the proceedings in opposition to Microsoft as a result of it hiked its costs or modified its choices — however due to the way it disclosed the adjustments to prospects.

“The ACCC does not take issue with the offering of new services, or a different plan, or, actually, an increase in price,” she mentioned.

“Microsoft and companies are free to vary the companies that they provide, and in addition to decide on as they see match the right way to worth for them.

Existing Microsoft 365 private and household subscribers who haven’t had their subscription renewed since July 8, 2025, and want to revert to their earlier plan could possibly choose the cancel possibility and observe the steps within the cancellation course of till the traditional plan is obtainable.