The Australian Competition and Consumer Commission (ACCC) has launched Federal Court proceedings against Microsoft Australia and Microsoft Corporation, over allegations that they misled an estimated 2.7 million Australian customers about their Microsoft 365 Personal and Family subscriptions.

The regulator claims that, after Microsoft integrated its Copilot AI assistant into these plans from 31 October 2024, it informed subscribers on auto-renewal of the change. Those subscribers were told their only options were to accept the new AI feature at a higher price or cancel their subscription.

Central to the ACCC’s case is the existence of a “Classic” version of both the Personal and Family plans.

This version allowed users to continue with their original subscription features, without Copilot, at the previous lower price.

The ACCC alleges that Microsoft did not reference this Classic plan in its direct communications or blog post but only made it visible as an option if subscribers initiated the cancellation process within their account settings.

Following the Copilot rollout, Microsoft raised the annual cost for the Personal plan by 45%, from A$109 ($71) to A$159, and for the Family plan by 29%, from A$139 to A$179.

The company communicated these changes through two email notices and a blog post targeting auto-renewing users.

The ACCC’s investigation began after it received several consumer reports and reviewed discussions on online forums such as Reddit.

Reports submitted to the ACCC Infocentre were key in confirming that subscribers could still access Classic plans if they attempted to cancel their existing contract.

The regulator is seeking penalties, injunctions, declarations, consumer redress, and costs.

The ACCC argues that consumers who were not informed about the Classic option may have been harmed financially by having their subscriptions automatically renewed at higher prices with Copilot included.

Subscribers who have not yet renewed since 8 July 2025 may still be able to revert to a Classic plan by following the cancellation procedure and choosing that option when prompted.

The ACCC noted that Microsoft retains full control over available plans and pricing, which could change at any time.

ACCC chair Gina Cass-Gottlieb said: “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.

“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.”