microsoft 365

ACCC Takes Microsoft to Court Over Allegedly Misleading 365 Subscription Price Hikes

In a significant move that’s sending ripples through the tech and consumer rights communities, Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), has initiated legal proceedings against Microsoft over allegedly deceptive practices related to its Microsoft 365 subscription plans.

This isn’t just another corporate lawsuit — it affects millions of Australians, from students and freelancers to small businesses and government offices, who rely on Microsoft 365 every day. At the heart of the case? Allegations that Microsoft misled users about price increases, particularly after integrating its AI-powered assistant, Copilot, into standard subscription tiers.

Let’s break down what happened, why it matters, and what could come next.

What’s Going On? The Core Allegation

According to verified news reports from ABC News, The Guardian, and the Australian Financial Review (AFR), the ACCC has filed a lawsuit in the Federal Court alleging that Microsoft deliberately misled around 2.7 million Australian subscribers about changes to their Microsoft 365 subscriptions.

The crux of the issue lies in how Microsoft communicated — or failed to communicate — price hikes tied to the rollout of AI features, specifically Microsoft 365 Copilot, an artificial intelligence tool designed to assist with writing, data analysis, and email management.

“Microsoft ‘deliberately omitted’ AI-free option in 365 price rises, ACCC alleges,” reported The Guardian on 27 October 2025, citing court filings.

The ACCC claims that: - Microsoft introduced higher pricing for Microsoft 365 subscriptions without clearly informing customers that the increase was directly linked to the inclusion of Copilot. - Consumers were not given the option to opt out of the AI feature and keep their original pricing. - Many users were effectively forced into paying more for a service they may not have wanted or needed.

In short, the ACCC argues that Microsoft bundled AI functionality into existing plans, then raised prices — all while obscuring the true reason behind the change.

“The consumer watchdog is suing Microsoft for allegedly misleading around 2.7 million Australians over its Microsoft 365 subscriptions,” confirmed ABC News in its 27 October report.

Recent Updates: A Timeline of Key Developments

Here’s a chronological look at how this situation unfolded, based on verified sources:

27 October 2025 – ACCC Files Federal Court Lawsuit

• The ACCC formally initiates legal action against Microsoft.
• The regulator alleges misleading conduct under Australian Consumer Law, particularly around false or deceptive representations about pricing and product features.
• The case is expected to focus on how Microsoft notified customers of changes between mid-2023 and early 2025.

27 October 2025 – Media Outlets Break the Story

• ABC News publishes: "Breaking: ACCC sues over allegedly misleading Microsoft 365 subscription hikes"
• AFR reports: "ACCC alleges Microsoft misled users into price hikes for AI assistant", highlighting concerns about lack of transparency in AI integration.
• The Guardian adds context: "Microsoft ‘deliberately omitted’ AI-free option in 365 price rises, ACCC alleges", quoting internal ACCC statements.

28 October 2025 – Public Reaction Grows

• Social media platforms see a surge in discussions among Australian Microsoft 365 users.
• Reddit threads and Facebook groups begin sharing screenshots of subscription emails, many showing vague language about “enhanced features” and “modern workplace tools.”
• Consumer advocacy groups, including CHOICE Australia, issue statements supporting the ACCC’s action.

29 October 2025 – Microsoft Responds (Silently)

• As of writing, Microsoft has not issued a public statement.
• However, industry insiders suggest the company is preparing a detailed rebuttal, likely focusing on user benefits of Copilot and claims that notifications were “clear and compliant.”

Note: All developments listed above are based on official news coverage. Additional context from secondary sources is used only for background and analysis, clearly indicated where applicable.

Why This Matters: The Bigger Picture Behind the Lawsuit

To understand why this case is so significant, we need to look beyond the immediate allegations.

Microsoft 365 Is Everywhere in Australia

From school classrooms to hospital admin teams, small cafes to national banks, Microsoft 365 is deeply embedded in Australia’s digital infrastructure.

• Over 80% of Australian businesses use Microsoft 365, according to industry estimates.
• The platform includes essential tools like Word, Excel, Outlook, Teams, and OneDrive.
• For many, it’s not just a convenience — it’s mission-critical software.

So when prices go up — especially without clear explanation — it hits real people in their pockets.

The Rise of AI in Everyday Software

Microsoft’s push to integrate Copilot into its core suite is part of a broader industry shift: embedding AI into everyday productivity tools.

• Copilot can draft emails, summarise meetings, analyse spreadsheets, and even write code.
• But access comes at a cost — and the ACCC alleges that cost was hidden behind vague marketing.

“Customers were misled into paying more for Microsoft 365 subscriptions with the inclusion of Copilot,” stated one ACCC source in a verified news report.

This raises a critical question: Should AI features be mandatory, or should users have a choice?

The ACCC argues that forcing AI onto users without transparency violates consumer rights. If a customer doesn’t want AI, they shouldn’t be charged for it — especially if the price jump is substantial.

A Precedent for AI Accountability

This case could become a landmark moment in the regulation of AI-driven software.

As AI becomes more pervasive, regulators worldwide are grappling with how to ensure fairness, transparency, and choice.

• The EU has already passed the AI Act, requiring disclosure when AI is used in consumer-facing products.
• In the US, the FTC has begun investigating similar issues with generative AI tools.
• Now, Australia is stepping up — and the Microsoft case may set a precedent for how tech giants handle AI monetisation.

“This isn’t just about Microsoft,” said one tech policy analyst. “It’s about whether companies can automatically upgrade users to AI services without consent.”

Contextual Background: Microsoft’s Pricing Strategy and Consumer Trust

To appreciate the depth of the ACCC’s concerns, it helps to understand Microsoft’s recent pricing moves.

The Copilot Rollout: From Optional to “Default”

In 2023, Microsoft launched Microsoft 365 Copilot as an add-on feature for enterprise customers, priced at around $30 per user per month.

But by mid-2024, Microsoft began phasing out lower-tier plans and replacing them with “AI-enhanced” versions.

For example: - The Home Premium plan, once priced at $12.99/month, was replaced with a new version including Copilot — at $15.99/month. - Similar changes affected Business Standard and Family plans.

While Microsoft claimed these were “value-added” upgrades, critics argue the communication was misleading.

Unverified context from industry reports: Internal emails suggest Microsoft instructed sales teams to describe the changes as “enhanced productivity tools” rather than “AI integration.” This phrasing, the ACCC claims, downplayed the AI component and its cost impact.

Consumer Trust at Stake

Microsoft has long enjoyed a reputation for reliability and professionalism. But this case threatens to erode that trust.

• A 2024 CHOICE Australia survey found that 62% of respondents were unaware that their Microsoft 365 subscriptions now included AI features.
• Nearly 45% said they would have preferred to opt in rather than be automatically upgraded.

“I didn’t even know Copilot was part of my plan,” said one Melbourne-based small business owner. “I only noticed when my monthly charge went up. No warning, no option to say no.”

This kind of automatic opt-in model is at the heart of the ACCC’s complaint.