ACCC targets Microsoft over alleged hidden subscription options in Australia
The Australian Competition and Consumer Commission (ACCC) has filed a major lawsuit against Microsoft, alleging that the company misled millions of Australian consumers over its Microsoft 365 and Office 365 subscription plans. According to the regulator, Microsoft “deliberately hid” a cheaper option from users, potentially misleading up to 2.7 million subscribers.
The case, filed in the Federal Court of Australia, accuses Microsoft of breaching Australian Consumer Law by failing to disclose that customers could remain on their existing, lower-priced plans without integrating Copilot, the company’s new AI assistant.
What the ACCC alleges
ACCC chair Gina Cass-Gottlieb said Microsoft’s actions represented “very serious conduct” affecting a significant portion of the Australian population.
“We allege that Microsoft deliberately hid the third option — the ability to keep the classic plan without Copilot — to boost revenue and encourage uptake of its new AI-integrated subscriptions,” Cass-Gottlieb stated.
The ACCC Microsoft case focuses on communications the tech giant sent to Australian consumers in late 2024, when Microsoft began integrating Copilot AI into its productivity suite. Customers were told that their subscriptions would automatically renew with Copilot — at higher prices — unless they canceled.
However, the ACCC says Microsoft failed to tell subscribers they could retain their existing “Classic” plans at the original price if they preferred not to use Copilot.
Price hikes spark outrage among consumers
Microsoft increased the cost of its Microsoft 365 Personal plan by 45%, from $109 to $159 AUD per year, while the Family plan rose 29%, from $139 to $179 AUD.
Many subscribers were unaware that they could opt out of the price increase by selecting “Cancel Subscription” and then choosing to stay on the Classic plan — a step hidden deep within the cancellation process.
This issue, which surfaced in online forums and social media, triggered widespread backlash. According to Daily Mail Australia and other media outlets, frustrated customers accused Microsoft of using dark patterns to make it harder to find the cheaper option.
Microsoft’s response
A Microsoft spokesperson told ABC News the company is reviewing the ACCC Microsoft lawsuit and remains “committed to transparency and consumer trust.”
“We are carefully reviewing the claims and will continue working constructively with the ACCC to ensure our practices meet all legal and ethical standards,” the spokesperson said.
Microsoft emphasized that it had communicated the Copilot integration and pricing changes via two emails and a blog post in October 2024. However, the ACCC argues those communications were “false or misleading” because they implied consumers had to either accept the new, higher-priced plans or cancel entirely.
The impact on Australian consumers
Consumer advocacy groups, including the Consumer Action Law Centre, welcomed the ACCC’s move, calling it a necessary step to hold large corporations accountable.
“Microsoft has a dominant market position, and millions of Australians rely on Microsoft 365 and Office 365 for work, school, and home use,” said CEO Stephanie Tonkin. “When such a company hides critical options, consumers deserve protection.”
The Consumer Policy Research Centre added that subscription-based services are increasingly problematic for consumers, with 75% of Australians reporting difficulty canceling unwanted plans.
The ACCC claims many users suffered financial harm from automatic renewals at higher prices. The regulator is seeking penalties, consumer redress, injunctions, and compensation for affected subscribers.
Why this case matters
The ACCC Microsoft lawsuit highlights growing regulatory scrutiny of big tech companies and their use of subscription models. As more software and productivity tools move toward monthly or annual payments, transparency about pricing and options has become a major consumer rights issue.
Cass-Gottlieb emphasized that the ACCC is not challenging Microsoft’s right to increase prices or launch new features like Copilot, but rather the way it communicated these changes.
“This case is about informed choice,” she said. “We allege that millions of Australian consumers were deprived of that choice.”
What happens next
The Federal Court will now consider the ACCC’s case against Microsoft, which could lead to significant financial penalties if the regulator proves its claims.
Consumers who have not yet renewed their Microsoft 365 Personal or Family subscriptions since July 2025 may still be able to revert to their Classic plan by starting the cancellation process and selecting the hidden option.
If successful, the ACCC Microsoft lawsuit could set a legal precedent for how subscription services must communicate pricing changes and renewal terms in Australia and beyond.
Conclusion
The ACCC’s case against Microsoft underscores a critical message to all global corporations: transparency isn’t optional. As the tech giant faces court over its Microsoft 365 pricing practices, millions of Australians will be watching to see whether this legal action reshapes how subscription-based software operates in the future.
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