Microsoft is currently facing legal action in Australia, accused of misleading its Microsoft 365 subscribers. The lawsuit, filed by the Australian Competition and Consumer Commission (ACCC), claims the Windows maker failed to inform users about a cheaper subscription alternative after increasing prices for plans that included its new Copilot AI service. On October 31, 2024, the tech giant reportedly presented existing subscribers with a choice: accept the higher prices or cancel their subscriptions.
Australia Initiates Legal Action Against Microsoft for Misleading Practices
In an official press release, the ACCC announced that it has commenced proceedings in the Federal Court against both Microsoft Australia and its parent company, Microsoft Corp. The core of the lawsuit revolves around the significant price increases for Microsoft 365 Personal and Family plans.
Following the integration of its AI chatbot, now known as Microsoft 365 Copilot, the company raised the price of the Personal plan by a substantial 45 percent, jumping from AUD 109 (approximately Rs. 6,300) to AUD 159 (roughly Rs. 9,200). The Family plan also saw a 29 percent increase, rising to AUD 179 (around Rs. 10,300).
The central allegation states that Microsoft’s communication to its estimated 2.7 million existing subscribers, delivered via emails and a blog post, was deceptive. It’s claimed that users were given a false ultimatum to either accept the new, higher prices or cancel their service. Critically, Microsoft allegedly omitted a third option: continuing their subscription at the original price without the new 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,” stated Gina Cass-Gottlieb, Chair of the ACCC. She emphasized, “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 the severe penalties for such breaches under the Australian Consumer Law. Companies can face a maximum fine of AUD 50 million (approximately Rs. 289 crore) per infringement, or three times the total benefits obtained by the company from the breach, or 30 percent of its adjusted turnover during the period of the violation, whichever amount is greater.