Microsoft Faces Lawsuit in Australia Over Allegedly Misleading Users on Copilot Pricing

Microsoft is facing a lawsuit in Australia for allegedly misleading its Microsoft 365 subscribers in the country. The lawsuit has been brought forth by the Australian Competition and Consumer Commission (ACCC) against the Windows maker for allegedly failing to inform subscribers about a cheaper alternative while hiking the price of the subscription plans after integrating Copilot with the service. The Redmond-based tech giant introduced the price hike in the country on October 31, 2024, informing subscribers to either pay the higher prices or cancel their subscription.

Australia Sues Microsoft Over Misleading Subscribers

In a press release, the ACCC announced that it has commenced proceedings in the Federal Court against Microsoft Australia and its parent company, Microsoft Corp. The crux of the lawsuit is the price hike of the Microsoft 365 Personal and Family plans.

After integrating its AI chatbot with the service, which is now dubbed Microsoft 365 Copilot, the company increased the price of the Personal plan by 45 percent from AUD 109 (roughly Rs. 6,300) to AUD 159 (roughly Rs. 9,200). The Family plan's price was also hiked by 29 percent to AUD 179 (roughly Rs. 10,300).

The main allegation against the company is that while informing the existing subscribers, which is estimated to be 2.7 million in the country, via two emails and a blog post, it told them to either accept the higher prices or cancel their subscription. This is being called misleading, as the tech giant did not inform them about a third option, which was to retain the subscription at the same price without any AI features.

“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,” Gina Cass-Gottlieb, Chair of the ACCC, said, adding, “All businesses need to provide accurate information about their services and prices. Failure to do so risks breaching the Australian Consumer Law.”

The ACCC highlighted that the maximum penalty that can be imposed on a company for each breach of the Australian Consumer Law is the greater of AUD 50 million (roughly Rs. 289 crore), three times the total benefits obtained by the company that were reasonably attributed, or 30 percent of its adjusted turnover during the period of the breach.