• Australia's ACCC has filed a lawsuit against Microsoft for deceptive pricing practices.
• 2.7 million customers allegedly misled regarding higher-priced subscription plans.
• Subscription costs for Microsoft 365 personal and family plans increased significantly after AI integration.
• The ACCC claims Microsoft failed to disclose a cheaper plan option to consumers.
• Potential penalties for Microsoft could reach A$50 million or more.

The Australian Competition and Consumer Commission (ACCC) has initiated legal action against Microsoft, alleging that the technology giant misled approximately 2.7 million customers regarding pricing for its Microsoft 365 subscriptions. Following the integration of its AI tool Copilot into the service, the ACCC claims that Microsoft prompted users to upgrade to higher-priced plans without adequately informing them of a continued cheaper option available without Copilot, which allegedly violates Australian consumer law, according to Channel News Asia, India Times, and Anadolu Agency.

The regulator's complaint highlights that starting from October 2024, the annual subscription for Microsoft 365's personal plan surged by 45% to A$159 (US$103.32), while the family plan's price increased by 29% to A$179. Customers were reportedly not made aware of a 'classic' plan available at a lower price until they initiated the cancellation process, leading to claims that Microsoft created a misleading impression about available choices, according to India Times and Anadolu Agency.

The ACCC is pursuing penalties, consumer redress, and injunctions against both Microsoft Australia and its parent company, Microsoft Corp. The maximum penalty that could be incurred is A$50 million or potentially more, reflecting either three times the benefits gained from the misleading practices or 30% of the corporation's adjusted turnover during the breach, notes Channel News Asia and India Times.

The seriousness of these allegations has been emphasized by ACCC chair Gina Cass-Gottlieb, who remarked that Microsoft’s conduct illustrates a potential breach of consumer trust. Microsoft has stated that it is actively reviewing the claims made by the ACCC, reinforcing that "Consumer trust and transparency are top priorities for Microsoft," according to Anadolu Agency.