Australia sues Microsoft over ‘misleading’ AI Copilot offer
Australia’s ACCC has taken Microsoft to the Federal Court, alleging it has misled about 2.7 million customers by tying Microsoft 365 price rises to Copilot while failing to clearly disclose a lower‑cost “Classic."
Australia’s competition regulator has commenced Federal Court proceedings against Microsoft, alleging the tech giant has misled about 2.7 million customers by tying price rises for Microsoft 365 to the integration of its AI assistant, Copilot, and obscuring a lower-cost “Classic” alternative.
The Australian Competition and Consumer Commission (ACCC) said that since 31 October 2024 Microsoft has told auto‑renewing Microsoft 365 Personal and Family subscribers they must either accept Copilot and pay more or cancel, without clearly disclosing that they could keep their existing features at the previous price via a “Classic” plan.
The regulator alleged this omission has misled consumers about their choices.
According to the filings, annual fees for Microsoft 365 Personal have increased by 45% to A$159, and Family by 29% to A$179, following Copilot’s addition to consumer plans in Australia from 31 October 2024 and a broader rollout in January 2025.
How has Microsoft responded?
Microsoft has said it is reviewing the ACCC’s claims and has reiterated that consumer trust and transparency have been priorities. The company has stated it remains committed to working with the regulator.
Chief executive Satya Nadella has championed the company’s Copilot strategy as part of a wider push to embed AI across its products, but the regulator argued that any communication about plan options must be accurate and complete under Australian consumer law.
The ACCC sought penalties, injunctions, declarations, consumer redress and costs. Under Australian Consumer Law, the maximum penalty per contravention for a corporation has been the greater of A$50 million, three times the benefit obtained, or 30% of adjusted turnover during the breach period if the benefit cannot be determined.
Background and timeline
The regulator has said Copilot has been integrated into Microsoft 365 Personal and Family plans in Australia since 31 October 2024, with communications to subscribers via emails and a blog post. It has alleged that disclosure of the cheaper “Classic” option has typically appeared only when customers have initiated cancellation, rather than in the initial notices, which has formed a central part of its case.
Proceedings have been filed on 27 October 2025 in the Federal Court against Microsoft Australia and its parent company, Microsoft Corporation.
What happens next?
The case has been lodged and will progress through the Federal Court. Microsoft has indicated it will engage with the process, while the ACCC has flagged digital markets and AI‑linked consumer issues as an enforcement priority. Hearing dates and further filings have yet to be confirmed publicly.
Elsewhere in the AI subscription race
Google has included Gemini‑powered features across Workspace at no extra charge while raising base plan prices by about US$2 per user per month, with changes beginning 17 March 2025 for existing customers.
Amazon has introduced Alexa+, a generative AI upgrade to its voice assistant priced at US$19.99 per month and free for Prime members, with a U.S. rollout beginning in early 2025.
OpenAI has added Enterprise Key Management, allowing organisations to encrypt ChatGPT content with their own external KMS, announced on 16 October 2025.