Microsoft in court docket for allegedly deceptive thousands and thousands of Australians over Microsoft 365 subscriptions

The ACCC has commenced proceedings within the Federal Court in opposition to Microsoft Australia and its mother or father firm Microsoft Corporation for allegedly deceptive roughly 2.7 million Australian clients when speaking subscription choices and value will increase, after it built-in its AI assistant, Copilot, into Microsoft 365 plans. 

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

The ACCC alleges this data offered to subscribers was false or deceptive as a result of there was an undisclosed third possibility, the Microsoft 365 Personal or Family Classic plans, which allowed subscribers to retain the options of their present plan, with out Copilot, on the earlier lower cost.

Microsoft’s communication with subscribers didn’t consult with the existence of the “Classic” plans, and the one approach 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 choosing “Cancel subscription”. It was solely on the next web page that subscribers got the choice to as an alternative transfer to the Classic plan. See a screenshot of the cancellation page revealing the Classic plan.

“Following a detailed investigation, we will allege in Court that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans,” ACCC Chair Gina Cass-Gottlieb stated.

“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,” Ms Cass-Gottlieb stated.

“We believe many Microsoft 365 customers would have opted for the Classic plan had they been aware of all the available options.”

Following the mixing of Copilot, the annual subscription value of the Microsoft 365 Personal plan elevated by 45 per cent from $109 to $159. The annual subscription value for the Microsoft 365 Family plan elevated by 29 per cent from $139 to $179.

Microsoft despatched two emails and printed a weblog publish to tell auto-renewing subscribers (as of 31 October 2024) concerning the Copilot integration and the approaching value 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 stated.

“All businesses need to provide accurate information about their services and prices. Failure to do so risks breaching the Australian Consumer Law,” Ms Cass-Gottlieb stated.

In establishing its investigation into this matter, the ACCC drew on a major variety of client experiences, in addition to commentary in on-line boards similar to Reddit. Information offered by shoppers to the ACCC’s Infocentre was crucial to alerting the ACCC to the alleged conduct, notably in figuring out the provision of the Classic plan by subscribers’ cancellation flows.

The ACCC is in search of orders together with penalties, injunctions, declarations, client redress, and prices.

Consumer response

The ACCC believes the thousands and thousands of Australian shoppers who had been allegedly misled by Microsoft concerning the availability of the Classic plan might have suffered financial hurt by the automated renewal of their subscription with Copilot integration at a better value.

The ACCC is in search of client redress on this case for Microsoft 365 Personal and Family subscribers affected by the alleged conduct.

Existing Microsoft 365 Personal and Family subscribers who haven’t had their subscription renewed since 8 July 2025 and want to revert to their earlier plan might be able to choose the cancel possibility and observe the steps within the cancellation course of till the Classic plan is obtainable. However, the ACCC notes that the subscription choices and costs provided are solely in Microsoft’s management and may very well be topic to vary at any time.

Example timeline for a subscriber on a Microsoft 365 Personal plan

• On 19 April 2024, a client bought an annual Microsoft 365 Personal subscription for $109 and enabled auto-renewal for one yr’s time.
• On 31 October 2024, Microsoft printed a weblog publish during which it said:
  • “To reflect the value we’ve added over the past decade and enable us to deliver new innovations for years to come, we’re increasing the prices of Microsoft 365 Personal and Family. The price increase will apply to existing subscribers upon their next renewal.”
• On 9 January 2025, the buyer obtained an e-mail informing them that AI options had been being added to their plan and the worth of the annual subscription would enhance from $109 to $159 beginning on 19 April 2025. See a screenshot of the first email sent to the consumers about the price increase.
• On 13 April 2025, 7 days earlier than their renewal date, the buyer obtained a second e-mail during which Microsoft said:
  • “We want to let you know about a change to the amount of your next payment. Unless you cancel two days before Saturday, April 19 2025, we’ll charge AUD 159.00 including taxes every year… We’ll tell you if this price ever changes. Cancel any time to stop future charges or change how you pay by managing your subscription in your Microsoft account.”
• On 19 April 2025, the buyer’s subscription was routinely renewed on the elevated value of $159.  The client was not conscious that switching to the Classic plan on the present subscription value of $109 was potential.

Screenshots displaying the communications with subscribers

Email despatched to subscribers informing them of the Copilot integration and value enhance

The web page late within the cancellation course of revealing the Classic plan

Competition, product security, client and honest buying and selling points within the digital financial system is a present ACCC compliance and enforcement priority.