Australia is Suing Microsoft Over Misleading Microsoft 365 Price Hikes

The Australian Competition and Consumer Commission is suing Microsoft for allegedly misleading approximately 2.7 million Australians with AI-related price hikes for its Microsoft 365 consumer subscriptions. The competition regulator is referring to the time in November 2024 when Microsoft 365 Personal and Family plans got a price increase due to the inclusion of Copilot features. Consumers could still keep their current pricing if they switched to new “classic” plans… but only if they knew about it.

“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,” ACCC Chair Gina Cass-Gottlieb said. “We believe many Microsoft 365 customers would have opted for the Classic plan had they been aware of all the available options.”

Following the November 2024 price increases, the Microsoft 365 Personal plan went from $109 a year to $159 (up 45%), while the Microsoft 365 Family plan went from $139 to $179 (up $29%). Microsoft did warn auto-renewing subscribers about the price increases by email, but the official communications allegedly failed to highlight that “classic” plans were also available for consumers who didn’t want to pay more for 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. “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 said.

A Microsoft spokesperson told Reuters that the company was reviewing the ACCC’s claim in detail. The maximum penalty that the company is facing is the greater of A$50 million, three times the total benefits obtained that were reasonably attributable, or 30% of the corporation’s adjusted turnover during the breach period if the total value of the benefits cannot be determined.