Australia: Australian Competition and Consumer Commission announces lawsuit against Microsoft over alleged misleading conduct

On 27 October 2025, the Australian Competition and Consumer Commission (ACCC) announced a lawsuit against Microsoft and its subsidiary Microsoft Australia, alleging misleading or deceptive conduct and false or misleading representations under sections 18, 29(1)(i), (l), and (m) of the Australian Consumer Law (ACL). The ACCC claims that since 31 October 2024, Microsoft offered existing Microsoft 365 Personal or Family subscribers a choice between continuing their subscription with artificial intelligence (AI) integration at an increased price or cancelling it. A third option, which allowed subscribers to maintain their subscription without AI integration at the previous price, was not disclosed in communications. Microsoft Corporation launched its AI product, Copilot, in 2023. On 31 October 2024, Microsoft US published a blog post announcing the integration of Copilot into Microsoft 365 Personal and Family bundles and an increase in subscription prices. Subsequent emails from Microsoft Australia to existing auto-renewing subscribers informed them of the price adjustment for AI-powered features and the option to cancel. The ACCC alleges that the undisclosed 'Classic Option' was only visible if subscribers started the cancellation process, leading consumers to believe they had only two choices. The ACCC contends that Microsoft deliberately concealed the Classic Option to encourage uptake of AI integration and higher prices. The ACCC asserts that consumers who were unaware of this third option and accepted the higher-priced, AI-integrated bundle may have suffered financial loss equivalent to the price difference.